FFFA! New Year, Peak & Crash.

It’s the end of another week and that means it’s time for another Friday Free-for-all.  This is our regular end of the week news round up and open topic discussion thread for the weekend.  The first one of 2013!

Lets get to the links:

-REBGV HPI: peak down this much
-Here’s the press release
-Hottest property values dip in 2012
-Real Estate boom meet Dot Com Crash
-Jesse wins the 2012 prediction contest
-Here’s the 2013 prediction contest
-Why housing prices aren’t coming back
-Whistler condos down 39% over 5 years
-Dec 2012 Condo battle map
-Vancouver Realtor Hunger Index

So what are you seeing out there? Post your news links, thoughts and anecdotes here and have an excellent weekend!

*Just a reminder: Registration is open over at the Vancouver Peak Forum, but you must leave a human comment within 2 days of registering or your account will be automatically deleted.  This policy helps us keep the board purged of spammer accounts.  Thanks for your understanding!

147 Responses to “FFFA! New Year, Peak & Crash.”

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    Waiting to exhale Says:
    1

    In the past few days there has been an increased amount of reporting by MSM on the Vancouver RE market. I realize that this is the result of the release of month end stats but what I find interesting is the different message being drummed.

    National outlets are definately bearish when it comes to Vancouver RE while local MSM outlets are somewhat bullish. I can’t remember a time when Cam and Tsur were featured so many times to provide their “expert economical analysis of local real estate”.

    The local real estate boards/industry must be pleading hard to create their spin with local MSM. Their desperation is a clear indication of what is coming in the Spring market.

    Well-loved. Like or Dislike: Thumb up 62 Thumb down 0

    Battle of Vancouver: SFH Front – Dec/12 Map update complete
    – As predicted in November, Bear Forces successfully invaded North Vancouver and Burnaby East
    – Bear Forces also liberated Burnaby North and Tsawwassen.
    – Bear Forces had a major tank build-up in South Surrey/White Rock
    – The following Bull Territories are facing imminent defeat: Van East & Burnaby South.

    Well-loved. Like or Dislike: Thumb up 50 Thumb down 1

    Anonymous Says:
    3

    “But while cyclical ups and downs in the housing market are to be expected, my forecast is not simply for a cyclical downturn. Rather, I see a long-term fall in home prices that will not be reversed when the economy picks up.

    The key factor is demographics.”

    http://www.theglobeandmail.com/globe-investor/why-housing-prices-arent-coming-back/article6929120/

    Well-loved. Like or Dislike: Thumb up 28 Thumb down 0

    Anonymous Says:
    4

    Lots of denial in the comments section of that G&M article.

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

    Delta Council has approved a 37 storey condo tower for Scott Road and 80th. It’s going to be the tallest building in Delta.

    http://www.vancouversun.com/news/metro/Delta+approves+storey+highrise+bring+density+Scott+Road/7773412/story.html

    Meanwhile, the Vancouver Sun is reporting that unemployment in Canada has just hit a 4 year low. They are also headlining on their website a real estate booster piece about luxury properties on Belmont Avenue. So I guess the real estate boom is still on over at the good ole Vancouver Sun.

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

    patriotz patriotz Says:
    6

    “Meanwhile, the Vancouver Sun is reporting that unemployment in Canada has just hit a 4 year low.”

    As did US unemployment in late 2006/early 2007.

    http://data.bls.gov/timeseries/LNS14000000

    Well-loved. Like or Dislike: Thumb up 40 Thumb down 2

    Short'em High Says:
    7

    sammy Says:
    January 4th, 2013 at 6:27 am

    …Meanwhile, the Vancouver Sun is reporting that unemployment in Canada has just hit a 4 year low…

    On the other hand, StatsCan labour force statistics have been all over the place in recent years. Using simple comparison with relatively smooth US numbers, the Canadian numbers seem to have error bar of something like +/-100%. It’s almost like the statisticians have some sort of operator error when they prepare the spreadsheet – summing changes from the wrong column or missing ranges of the data.

    Here is one account from earlier in the year about the incompetence of StatsCan on this survey. It makes one wonder if StatsCan workers are high when they prepare these releases.

    Dale
    Tue, May 15, 12 at 10:42 AM
    The unemployment rate in Nanaimo was not 16.3% a year ago; it is probably not 4,8% today. That the labour force has declined by 10000 people is totally absurd. It is widely recognised that Statistics Canada labour force surveys are deeply flawed to the point of being statistical garbage…

    http://www2.canada.com/nanaimodailynews/news/local/story.html?id=7d6be330-0194-441b-8d00-bb30a70288f2

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

    southseacompany Says:
    8

    ‘The Thirties Grind’ blog girl on Global News with “Absurd Vancouver Properties of 2012 wrap up”.

    Entertaining piece.

    http://thethirtiesgrind.com/2013/01/02/absurd-vancouver-properties-of-2012-wrap-up-on-global-bcs-morning-news/

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

    Five year bond hits 1.50%. http://www.bloomberg.com/quote/GCAN5YR:IND That’s still super low, but 25 bps higher than a month ago.

    Well-loved. Like or Dislike: Thumb up 41 Thumb down 5

    real_professional Says:
    10

    @VMD – my hat off to you.

    I love the battle of Vancouver map – any plans for a SFH version!!

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

    Bag it and tag it Says:
    11

    #5 Sammy
    “Delta Council has approved a 37 storey condo tower for Scott Road and 80th. It’s going to be the tallest building in Delta”

    Is it true Delta was built on a delta?? Delta will be the next great tourist destination after the big earthquake hits. They’ll be coming long and far to see the 37 flr Leaning Tower of Delta.

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

    Anonymous Says:
    12

    ….So I guess the real estate boom is still on over at the good ole Vancouver Sun…..

    You actually read the Sun? Wow.

    The local RE industry flyers have the same number of RE ads but more news, they’re free, and they’re not pretending to be real newspapers.

    Well-loved. Like or Dislike: Thumb up 32 Thumb down 0

    Girlbear Says:
    13

    Interesting map attached. Put together by Atlas Moving Company – shows patterns of migration. Includes Canada!

    Orange = outgoing states/provinces

    http://www.businessinsider.com/atlas-vans-moving-map-2013-1

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

    The contrast between the Globe and Mail and the Vancouver Sun is quite stunning. In the Vancouver Sun right now:

    Metro Vancouver suburbs continue to attract home buyers at ‘slow and steady’ pace

    Derek Love is gearing up for another busy year selling real estate in suburban Vancouver.

    After a brief lull in business in the latter half of 2012, when properties lingered on the market a little longer than usual and prices stalled, activity is once again starting to pick up.

    “We’ve noticed, in the month of December, a lot more confidence. We are getting calls for from all different types of buyers who are eager and asking questions about homes we’ve had for sale for six months,” said Love…

    Where property prices in some areas of Vancouver, West Vancouver, Richmond and Burnaby climbed by as much as 30 per cent last year, prices in the Tri-Cities and New Westminster stayed the course.

    “We didn’t really have that big increase,” said Love, noting $600,000 to $800,000 will still buy “a really good family home — well kept, basement suite, nice yard, quiet street…

    Katrina Amurao, a realtor with Re/Max 2000 Realty, said the stability in Surrey’s market is driven largely by an equally strong demand for and supply of single-family homes.

    “There are a lot of them and they are selling,” she said.

    Amurao said the average price of a single-family home in Surrey in December 2012 was $560,000 — a figure virtually unchanged from twelve months earlier.

    “The prices here have not necessarily been jumping the way they did in Vancouver,” she said…

    Eugen Klein, president of the Real Estate Board of Greater Vancouver, said the relative affordability of detached homes is not the only reason for the suburbs continued real-estate health.

    He said investments in transit, including the future Evergreen rapid-transit line, the Golden Ears Bridge and Port Mann Bridge, combine to make centres outside of Vancouver more accessible and attractive to families and individuals looking to buy.

    “Those areas are starting to blossom. We’re actually seeing in some areas price increases, because people are going there,” Klein said.”

    http://www.vancouversun.com/business/Metro+Vancouver+suburbs+continue+attract+home+buyers+slow/7773217/story.html

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

    patriotz patriotz Says:
    15

    “We didn’t really have that big increase,” said Love, noting $600,000 to $800,000 will still buy “a really good family home — well kept, basement suite, nice yard, quiet street…in Tri-Cities

    Kind of says it doesn’t it. A price that used to be considered luxury gets you into a nondescript house with someone living in your basement in a nondescript suburb.

    Meanwhile in Seattle you get this for 700K:

    http://www.zillow.com/homedetails/743-NE-56th-St-Seattle-WA-98105/48768779_zpid/

    Well-loved. Like or Dislike: Thumb up 34 Thumb down 1

    Patiently Waiting Says:
    16

    “Interesting map attached.”

    The numbers are blurry, but it appears to be 269/169 or 61.4% outbound for BC. Just behind Ontario and ahead of any American state. Canadians appear to be more mobile than American at the moment, but wait until underwater mortgages become common here too.

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

    Patiently Waiting Says:
    17

    “No economic growth expected in Vancouver in next two years.
    Low condo prices and slowing Chinese economy to blame.

    http://www.news1130.com/2013/01/03/no-economic-growth-expected-in-vancouver-in-next-two-years/

    Really? Low prices? :P

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

    The Gimp Says:
    18

    @patriotz

    ….Meanwhile in Seattle you get this for 700K:

    http://www.zillow.com/homedetails/743-NE-56th-St-Seattle-WA-98105/48768779_zpid/…..

    sure, if you don’t mind living two houses away from the I5

    Hot debate. What do you think? Thumb up 15 Thumb down 16

    VHB #9

    It’s becoming prety obvious that our market is set to correct anyway, but there is nothing that would crush prices more than higher mortgage rates. There are all kinds of suptle hints on BNN today that rates are about to begin a slow reversal.

    The FED Finance Committee is puting pressure on Bernanke to ease up on buying mortgage backed securities and treasury bonds. The bond market is telling us that the private sector has already stopped dancing to his tune, and rates will go higher…just in time with our usual spring listings surge.

    Enjoy the ride folks.

    Well-loved. Like or Dislike: Thumb up 35 Thumb down 2

    Just posted a new ‘renewal gap’ graph in the forum.

    The picture is here:
    http://vancouverpeak.com/attachment.php?aid=5

    The explanation and data are here: http://vancouverpeak.com/Thread-Renewal-Gap?pid=131#pid131

    Basically, the renewal gap shows what the mortgage rate today is compared to 5 years ago. So, people coming up for renewal might be able to afford a bigger mortgage even with the same monthly payment if interest rates are lower now than 5 years ago. This is mostly a demand indicator for the move-up market.

    Through 2012, the renewal gap grew a lot to a massive 260bps in December. This reflects the fact that interest rates in 2007 were big, so those renewing today get a big happy surprise when they renew.

    To me, this makes it even more remarkable that the market started tanking in 2012. There were lots of people who could afford a bigger mortgage, but still prices dropped. Perhaps the new 25-yr am rule counteracted this sufficiently.

    In any case, the renewal gap will stay around 200-250 bps in 2013, before plummeting in 2014. If 2013 sees further drops in the market, the shrinking of the renewal gap in 2014 will put up another huge barrier to any nascent recovery.

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

    oooh Bard Lamb is gonna be on BNN…..

    spinning the Toronto market no doubt, these guys are working hard this week trying to fight these disastrous headlines :)

    Well-loved. Like or Dislike: Thumb up 26 Thumb down 0

    gordholio Says:
    22

    “I am now convinced that we will never hear the end of housing bubble speak. The premise is now as firmly entrenched in popular consciousness as carbon emissions and TMZ. It has taken the form of idolatry in the blogosphere, where any countervailing narrative is demonized. It has catapulted university dropouts into media darlings because of a hackneyed webpage and an opinion. It has been tarted up by so-called experts who predict impending doom year after year, despite being completely wrong every time.”

    These words of wisdom and much more, from Chief Scumbag and Head Liar Cameron Muir (and as seen in the BCREA November bulletin), can be found here:

    http://www.bcrea.bc.ca/docs/economics-forecasts-and-presentations/2012-11bulletinarticle.pdf

    My apologies if this was already discussed. I saw it for the first time today and couldn’t resist posting it.

    Well-loved. Like or Dislike: Thumb up 39 Thumb down 0

    @gordholio, few around here have been around the RE blogosphere to remember that one Cam Muir, then of another employer, tried his hand in the comments section of one of the local blogs. One of the more prolific commenters back then ran him out of town.

    Was that on VCI or was it on van-housing? Anyone remember? I sure hope we can find these comments and re-post them. Sounds like Cam Muir has an ax to grind with sites like this one.

    “Let’s put this on the internet.”
    “No, we have to reach people whose opinions actually matter.”
    – Bart Simpson

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

    Brad Lamb

    -Flaherty declared war on the real estate business

    -if gas was 35% more expensive no one would buy it, which is the increase in cost to buy a place with the decrease in mortgages from 40 year to 25 year made.
    (doesn’t mention that those decreases in amortization are bring THE F’ING HOUSE PRICES DOWN AND SAVING BUYERS THOUSAND OVER THE YEARS…WTF)

    -no where near a bubble

    -drops only happen during recession

    -there will be a drop at some point in the future, but not now

    I so want that guy to eat his words…

    Well-loved. Like or Dislike: Thumb up 54 Thumb down 1

    southseacompany Says:
    25

    Re: Cam Muir. Here’s some interesting quotes from bygone days;

    “Beyond all expectations, Vancouver’s housing market is hitting record sales activities and prices late in 2009, something Muir said is not sustainable because interest rates have nowhere to go but up.”

    “The same sudden increase in affordability on the Coast market caused a frenetic amount of activity once fear from the crisis wore off. But that activity cannot last, Muir argued, calling it “irrational exuberance.”

    “How high can prices go before consumers reach a limit on what they can pay?”

    Kamloops Daily News, Nov, 2009.
    http://www.kamloopsnews.ca/article/20091105/KAMLOOPS0101/311059963/-1/KAMLOOPS01/kamloops-firm-in-frothy-bc-real-estate-market

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

    Domocrass Says:
    26

    My sense is that new listings are still asking peak prices. Slow sales should continue.

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

    VanRant Says:
    27

    Cam Good has been very quite lately and CNY is fast approaching. Wondering when is he going to fire up the yellow helo and invite his RE friends for a flyover. Better contact Global soon.

    Hot debate. What do you think? Thumb up 19 Thumb down 3

    @25
    Before becoming a small, slimy creature who lived in a cave at the roots of Whistlery Mountains, Callum was once a pure-hearted hobbit named Smuirgol. Until he became corrupted by the Bling.

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

    Atomic Frog Says:
    29

    Here is the no of people who are employed in Metro Van for the last 6 months (in ,000) both full time and part time combined

    Jun 1,290.8
    Jul 1,298.1
    Aug 1,297.3
    Sep 1,291.8
    Oct 1,284.2
    Nov 1,273.8
    Dec 1,268.1

    A quick scan of the # reveals that there are approx 30K people less in the workforce in Metro Van by Dec compare to Jul

    Could this drop due to an increase in net loss that come from inter-provincial migration? The funny thing is that the unemployment rate in the Metro Van region is relatively flat in the same time period hinting that most of these “losses” are both in the workforce and in the population.

    30K less people in the workforce over a 6 month period is surely a warning sign for things to come.

    Say a lot of low income ppl are fed up with Van and leave the region. Most of these ppl are renters I would think. This would put more downward pressure on the rental market than before. (less renters, more listings)

    Say the employment number worsen, or the above trend continues in the next 6 months; eventually, it will hit the house owners as some of them will be without a job and will have to force to sell in a down market.

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

    Re: #29 Atomic Frog
    Thanks for the data, but I don’t think it would lead to any conclusion based on these figures alone. For example, the variation can be seasonal. Not hard to imagine more people employed for the summer tourist season.

    Like or Dislike: Thumb up 6 Thumb down 1

    YLTNboomerang Says:
    31

    I think we will continue to see a difference in reporting at the national level versus local level because of what the readers want to hear:

    National:
    Readers are scared of a crash and are pacified by reading that only in Vancouver and perhaps Toronto will it be bad…the rest of the country will only mildly correct – scapegoat Vancouver

    Local:
    Readers are scared of a crash and want to hear that it is OK in Vancouver and that we will ride with the national average with only a slight decline. Quote the pumpers.

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

    Local:
    Readers are scared of a crash and want to hear that it is OK in Vancouver and that we will ride with the national average with only a slight decline. Quote the pumpers.

    And once it’s obvious that the city is crashing, local homeowners with just chant this to themselves: “Vancouver may be crashing but fortunately not my house. It is a special. It is a beautiful and unique snowflake. Everyone wants to live in it. It only goes up in value.”

    http://www.youtube.com/watch?v=4X2AvfSTi6Q

    Hot debate. What do you think? Thumb up 13 Thumb down 3

    Anonymous Says:
    33

    How come we can’t preview posts?

    Is it an easy fix?

    Like or Dislike: Thumb up 4 Thumb down 1

    News from the front line…

    3963 w22nd
    sold 1.805M feb 24, 2012
    sold 1.58M jan 2, 2013

    This one is ouch!

    Well-loved. Like or Dislike: Thumb up 70 Thumb down 2

    Today’s sales are also ouch, sub 40. New listings not so much, certainly no signs of a rush for the exits. I am very curious to see how this spring unfolds, whether we see any kind of rebound from a dismal 2012.

    Well-loved. Like or Dislike: Thumb up 22 Thumb down 2

    New Listings 211
    Price Changes 61
    Sold Listings 33

    TI:12098

    http://www.paulboenisch.com

    Well-loved. Like or Dislike: Thumb up 109 Thumb down 0

    Groundhog Says:
    37

    Wow, after reading through the comments in the G&M article I am more confident then ever this market is going to get very ugly quickly. People seem to have no clue what risks lie ahead.

    http://www.theglobeandmail.com/globe-investor/why-housing-prices-arent-coming-back/article6929120/comments/

    I like this one, a reasonable posting saying the gains we’ve seen are history and maybe prices just hold steady for the next 10 years as a best case scenario.

    “ped xing
    10:20 AM on January 4, 2013

    These comments show how myopic humans are. The gist of the booster argument is that “housing prices have been strong as long as I can remember; I’ve made lots of money and consider myself brilliant, therefore housing prices will continue to rise rapidly forever!” I’ve posted too many times to remember that any sober analysis of the housing market shows up almost entirely red flags, moreover that nothing goes up forever. Whether you look at supply, demand, demographics, or global economic conditions, none of it looks bullish over the medium to long term. Probably the best case scenario is that prices hold at current levels but continued gains lack any catalyst for a very long time to come. So if you’re cool with the house you buy today to be worth the same in 2023 then buy away!”

    and the reply:

    “Johnny Tokyo
    12:04 PM on January 4, 2013

    ah yes, yet another bubble-person waiting to cash in on the collapse of an over-inflated (according to him) real estate market.

    Waiting for a cheap house in an interesting urban pocket where there’s a pub he can drop into and watch squads of inactive realtors drowning their sorrows and selling their Bentley’s off the cuff while he brags to anyone who’ll listen what a deal he got ’round the corner on XXxx Ave.

    How’s that working out for you so far ?”

    It seems like about 90% of the commenters are in denial.

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

    Happy 12 k everyone! 10 days earlier than last year.

    Well-loved. Like or Dislike: Thumb up 66 Thumb down 1

    Girlbear Says:
    39

    @Groudhog

    I think a lot of these comments on G&M article are Toronto. It hasn’t quite hit there yet. Was there a couple of weeks ago and only a few are starting to think there could be trouble coming. And these are mostly finance guys…not your average Joe.

    Like or Dislike: Thumb up 6 Thumb down 1

    Anonymous Says:
    40

    Just opened the assessment letter, another year of increasing dangerously: up $500,000+ (Van West). This year, not rushing out to buy those Mercedes:

    http://www.mercedes-benz.ca/content/canada/mpc/mpc_canada_website/en/home_mpc/passengercars/home/new_cars/models/sl-class/r231.flash.html

    Like or Dislike: Thumb up 1 Thumb down 3

    Groundhog Says:
    41

    @ #118 The Gimp

    Take a look at the houses all around that area before dismissing the one right next to the I-5. It’s actually a pretty nice area right around the University. I have a relative that purchased a house in 2004 for 450K right around there, today the Zillow estimate is….450K. The same house in the slums of East Van would list now for $1.2m or so.

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

    The latest Macleans edition: “Inside the great real estate crash of 2013″ on the cover page.

    Can’t get more bearish like that!

    Well-loved. Like or Dislike: Thumb up 46 Thumb down 1

    Groundhog Says:
    43

    @Girlbear

    You’re probably right. It’s crazy how people still stand by all the typical arguments:

    -RE is local
    -Canada best country to live in
    -Not building anymore land
    -RE always goes up in the long-run

    And heres one comment to top it off:

    “In real terms, the value of desirable real estate will always hold its value. Housing prices reflect the fact that there’s nowhere else to put your money these days.

    Nothing else, NOTHING ELSE is as safe as well-located bricks and mortar on land.
    For utility
    for capital appreciation
    for tax savings
    for dividends (rents)
    for safe wealth storage NOTHING can compare.

    The downside is portability.
    So what ?
    Who’s leaving ?”

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

    Richmond today:
    33 new listings
    5 price drops
    1 sold

    Lol…

    Well-loved. Like or Dislike: Thumb up 68 Thumb down 1

    Wow, 33 sales.

    The lineup of idiots is getting shorter and shorter.

    Well-loved. Like or Dislike: Thumb up 37 Thumb down 2

    This is based just on the 3 days in January–the 31st of December also fits in the 7 day window but I discarded it for this purpose since end of December numbers are so wonky.

    Jan-2013	
    Total days	21
    Days elapsed so far	3
    Weekends / holidays	1
    Days missing	0
    Days remaining	18
    7 Day Moving Average: Sales	60
    7 Day Moving Average: Listings	205
    SALES	
    Sales so far	179
    Projection for rest of month (using 7day MA)	1074
    Projected month end total	1253
    NEW LISTINGS	
    Listings so far	616
    Projection for rest of month (using 7day MA)	3696
    Projected month end total	4312
    Sell-list so far	29.1%
    Projected month-end sell-list	29.1%
    MONTHS OF INVENTORY	
    Inventory as of Jan 4, 2013	12098
    MoI at this sales pace	9.66
    

    Here are the norms:

    January Month-end Historicals (courtesy "VHB")
    year sell list sell/list
    2001 1225 3395 36.1%
    2002 2248 3626 62.0%
    2003 1966 3810 51.6%
    2004 1954 3039 64.3%
    2005 1697 3360 50.5%
    2006 1924 3471 55.4%
    2007 1806 4067 44.4%
    2008 1819 4675 38.9%
    2009 762 3700 20.6%
    2010 1923 5147 37.4%
    2011 1819 4801 37.9%
    2012 1577 5756 27.4%
    Mean 1727 4071 42.4%
    median 1819 3755 47.5%
    

    Sales are looking pretty low so far, listings are highish, but not bull-busting kind of numbers.

    If you want to see a super-bear spring, we need to have a few 300+ new inventory days in the next week. A 400+ listing day would be a good indicator, too. 2012 January had 2×300+ listings days in the 2nd week of the month; a 400+ day in the 3rd week.

    Well-loved. Like or Dislike: Thumb up 35 Thumb down 0

    Who cares if we don’t get some 300 and 400 listing days. If nobody is buying the market is doomed.

    Well-loved. Like or Dislike: Thumb up 26 Thumb down 3

    ReadyToPop Says:
    48

    Hot debate. What do you think? Thumb up 17 Thumb down 2

    HAM Solo Says:
    49

    @ Makaya

    That MacLean’s cover story is makin me noy-vuss! General interest magazines have a decent record of publishing contrary cover stories at the wrong time.

    All the smart people are lined up on the bear side. On the bull side, let’s face it, are a bunch of conflicted dopes. Or old fools. Or people who didn’t like book larnin and ended up in construction (or banking if they were dumb MBA’s).

    I still expect a crash, but wouldn’t it be ironic if we all missed something and it didn’t happen?

    Hot debate. What do you think? Thumb up 11 Thumb down 7

    Hi Addair,

    the reason I care about inventory growth is that MoI is the best predictor of price drops. MoI is total inventory divided by monthly sales. If you’re right and sales tank, then the denominator shrinks. Good! I say even better if the numerator is exploding at the same time, though.

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

    Groundhog Says:
    51

    @VHB

    Looking at 2010 and 2011, the 2-week holiday break for schools ended on the first day of reported listings, whereas this month it won’t end until Monday the 7th.

    Many people do take 2 weeks off work to be with their kids while they’re off, so we won’t be 100% out of holiday mode until Monday. Not sure if it will have a huge impact on listings and sales, we’ll see next week I guess, but is worth a consideration I think.

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

    Hi VHB,

    Your right of course.
    Sorry, I just got a little carried away when I saw those low sales, and I really think this will be the year. The big one. I can smell it. I can feel it in my bones.

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

    @groundhog: that seems plausible. Next week will reveal all!

    @addair: No probs. Remember that the sales appearing now are for deals made in December–there is a 1-2 week lag for sales to go through. Sales numbers typically rise in 2nd half of January.

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

    Girlbear Says:
    54

    @HAM solo

    You are so right. As soon as news hits the front page, makes me very very nervous also. Usually means go the other way on the trade. However in this case, we have the fundamentals on our side, and that isn’t changing for now.
    Any gov’t intervention to stall the housing slide could change everything though. Gov’t manipulation is heavy these days accross the board. Everything can change very quickly in any market in these strange times.

    Hot debate. What do you think? Thumb up 14 Thumb down 7

    southseacompany Says:
    55

    Re: McLean’s Cover. “Inside the Great Real Estate crash of 2013″

    Here it is.

    http://www.rogersmagazines.com/mme14ja2013.jpg

    Good agitprop on the supermarket shelves. Spread out a few when you go shopping this weekend

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

    Anonymous Says:
    56

    I just love the RE board tales of Sellers not selling and buyers not buying but prices not dropping. I guess it will be a long time before there are any sales and that means the parasite realturds are all starving. Yes, there is a God and she doesn’t like lazy dirt bags that wouldn’t recognize truth, honesty, and integrity if they kicked them in the nuts.

    Hot debate. What do you think? Thumb up 16 Thumb down 2

    Best place on meth Says:
    57

    @southseacompany

    http://www.rogersmagazines.com/mme14ja2013.jpg

    And did you notice the promo in the top left corner for the article about Tsur Somerville?

    Hot debate. What do you think? Thumb up 19 Thumb down 11

    Groundhog Says:
    58

    @Anonymous

    Illiquidity hides volatility in markets.

    Like or Dislike: Thumb up 5 Thumb down 2

    @Gordholio 22, others re: Muir

    You know, while I don’t agree with Cam that a bubble is impossible, I do agree with him in that it is impossible for anyone with a bullish argument, no matter how well posited, to not be simply chased out of dodge on one of these blogs. To be honest, this debate has been going on so long that no one is listening to the other side if they’ve taken the time to think about these things. I personally would really like to hear a bull present their views with the same informed concision as Ben Rabidoux did in his presentation in Nov.

    I think it’s time to find a forum where a good debate can happen between the Bears’ Best Warrior-Wonks and the Bull’s Best Warrior Wonks. Something along the lines of the
    Munk Debates.

    We invite the brainiest, best researched, most informed Champions of Bearishness (I’m thinking Rabidoux and Schiller or Turner for entertainment value) to debate the brainiest, best researched, most informed Champions of Bullishness…let’s say Rennie and Somerville or whoever will present a convincing data-driven article.

    A simple topic:
    “Be it resolved that there is a real-estate bubble in Vancouver”

    It would need a really, really good moderator. An unbiased but activist moderator. Who was the one who called Romney on his bs accusations about Bengazi? Someone like that, but a neutral party who would be able to spot BS like Rennie’s “if you take the bottom 80% of the market, the median price is affordable by a person making $50k therefore the great majority of the market is affordable by the average bloke”) kind of claptrap and ask them to justify their analysis.

    We could also have a couple of articulate blogizens from a couple of prominent bullish (Maybe Chipman, and Muir or ??) and bearish blogs and a couple of intelligent local bear blogdogs (Jesse and VMD?) to each ask their top questions of the opposition – again, the goal here is to maximize opportunities to draw out any flaws in the reasoning on either side.

    And then maybe audience questions because people like to participate.

    I think this could be fun. The goal would be both entertainment and fun. A room full of bulls and bears alike. Youtube posterity. A little local media splash. Hopefully everyone leaves with something they hadn’t considered before (regardless of which side they are from).

    So questions for the blog:

    -Who would your Bear Champions be (and why)?
    -Who would you pick for Bull champions (and why)?
    -Moderator?
    -Interrogator?

    -Is this an event that could be pulled off? Where could the money come from?
    – Would you go?
    -How would you set it up?
    -Promote it?

    -What should some of the sub questions be?

    Hot debate. What do you think? Thumb up 24 Thumb down 14

    The magazine cover indicator doesn’t work contrarian on real estate like it does for the stock market. Not to mention the circulation of Macleans is a paltry 300K.
    If it makes it to Better Homes and Gardens cover (circ 8 million) then I’d get concerned.

    Like or Dislike: Thumb up 6 Thumb down 0

    Just Looking said:
    “I personally would really like to hear a bull present their views with the same informed concision as Ben Rabidoux did in his presentation in Nov.”

    Those views are constantly front and centre in the MSM, including but not limited to: Vancouver Sun, Cameron Muir, Tsur, Global TV, various radio stations and local dailies, etc, etc. Okay – minus the “informed concision” part.

    Just Looking also said: “it is impossible for anyone with a bullish argument, no matter how well posited, to not be simply chased out of dodge on one of these blogs”

    I wonder if you’re writing to the various local MSM, asking why they refuse to entertain interviewing bears?

    Don’t forget that it is impossible for anybody with a bearish argument, no matter how well posited, to be featured by the local MSM in any way that has even the remotest resemblance to the time and space that bulls are given.

    We bears are motivated because we have overwhelming statistical data that shows we are in a real estate bubble. But the Vancouver MSM has acted and continues to act whorish and greedy, putting the needs of their real estate pimps over the need for balanced journalism and the longtime financial health of their readers.

    Hot debate. What do you think? Thumb up 27 Thumb down 8

    No Noise Says:
    62

    And if I’m not mistaken this is hardly the first Macleans cover story about the real estate bubble in Canada. There’s been at least one other in the past year and probably more over recent years.

    Like or Dislike: Thumb up 7 Thumb down 0

    No Noise Says:
    63

    @ Crikey

    Right. Ben Rabidoux should be regularly interviewed on Global. I would think as the correction becomes more obvious Global would come looking for him. Or he could offer his opinion to them. Perhaps he tries and is regularly denied?..

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

    HAM Solo Says:
    64

    Good points all re MacLeans. Also Roubini was a rock star for a while in 2007-08 before he was ultimately no use to anyone.

    There does need to be a period when the new paradigm hits the popular media…before they flog it to death. Personally I’m looking forward to the death of the real estate advertorial in all forms of hard copy media.

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

    @Crikey

    You can focus on the first bit of my post if you like, but you are missing my intended point.

    Yes, I’ve written to local media when they have simply parroted BS from bulls. Yes, it does seem tough to get a bearish word in edgewise, etc. etc.

    It is also the case that if anyone posts a bullish comment here that they get serious downvotage, regardless of the thoughtfulness of their argument. That’s not an attack, it’s an observation. No need to get defensive and show how the ‘other guy’ is somehow worse.

    My point is that I would be keen to see the best thinkers from both sides in a room debating the issue in an intelligent, data-driven way. I’d like to see the debators on both sides held to account for any flimsy analysis they try to pass off. I think it would be a good format to get at the nuance involved and perhaps get some of that airtime for those who have made bearish conclusions based on the data that you want to see. I also think the idea provides some fodder for interesting discussion here, thus my post and questions.

    Who knows, maybe it’s an idea people like and we organize ourselves to pull it off as a VCI-led event…

    Hot debate. What do you think? Thumb up 15 Thumb down 13

    @65
    G&M had hosted similar debate few months ago, featuring Ben.
    http://m.theglobeandmail.com/globe-investor/great-debate/

    It’d be nice to see similar debates this year.
    I’d be content seeing some of G&M’s best RE columnists squaring off with Vancouver Sun’s

    Hot debate. What do you think? Thumb up 16 Thumb down 7

    Not Ready To Be Slave Says:
    67

    They pronounced the word (bubblle), talked about very bad sales in Vancouver & Toronto, about how ridiculous are prices in Vancouver and included cople of interviews with Garth and some Bear-Girl.

    It was on CBC Radio today, at the prime time (when most of the population stuck in traffic on the way home from work)!

    Hot debate. What do you think? Thumb up 20 Thumb down 6

    Group masterbator #12 Says:
    68

    @Makaya

    I haven’t read Macleans for ages, but I am picking up this one!

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

    Here’s a Vancouver-based analyst on bubbles in the Vancouver Sun: Housing bubble could deflate slowly

    Looks to be about Canada as a whole, not Vancouver, but there you go.

    Like or Dislike: Thumb up 4 Thumb down 2

    patriotz patriotz Says:
    70

    “It is also the case that if anyone posts a bullish comment here that they get serious downvotage, regardless of the thoughtfulness of their argument. That’s not an attack, it’s an observation. No need to get defensive and show how the ‘other guy’ is somehow worse.”

    The is what Krugman calls the “opinions differ on the shape of the Earth” viewpoint – if you don’t give respect to an an opposing argument, no matter how unfounded, you are somehow being unfair.

    Give us an example of a “thoughtful” bullish argument on this forum that you think has not been given due consideration.

    Hot debate. What do you think? Thumb up 31 Thumb down 13

    Anonymous Says:
    71

    Sorry it’s off topic, but just pause for a moment to consider how ridiculous our local media has become. One of the top stories on CTV 6 o’ clock news last night was about a lost puppy. It was the second time they reported about this particular dog after reporting he/she was missing the night before. Last night they were updating us that a second dog was brought in to try to sniff out the location of the lost dog. This was one of the top three stories headlined at the opening of the broadcast at 6pm. You can’t make this up!

    Well-loved. Like or Dislike: Thumb up 33 Thumb down 10

    There is not a housing bubble in Vancouver. There was a housing bubble in Vancouver. We are now in post-bubble territory, dealing with the aftermath. The mania is past, we are now in the panic stage. The question is whether there will be a crash.

    The US housing bubble probably peaked around early 2006 (I think that is where Bill McBride put it), yet economists were still denying a housing bubble in 2008. Long after the market moved on to the secondary effects of the bubble, which led to the global financial crisis.

    Hot debate. What do you think? Thumb up 22 Thumb down 9

    patriotz patriotz Says:
    73

    “The magazine cover indicator doesn’t work contrarian on real estate like it does for the stock market.”

    It does when the cover is bullish:

    http://www.time.com/time/covers/0,16641,20050613,00.html

    But I can’t recall a time when the MSM in Canada (e.g. G&M, MacLeans) or the US (pre recent bust) have been bearish on RE, so there’s no past history to draw any conclusions from.

    Hot debate. What do you think? Thumb up 10 Thumb down 6

    Interesting that my bearish post gets voted down. I wonder why. Because I consider the bubble to be in the past? Is my bearishness not dogmatic enough? Or do many folks just read the first sentence?

    The bubble probably peaked in 2011, has been slowly deflating since and now has turned to panic. Just because investment continues does not mean the bubble in not in the past. Investment frequently lags. That is how shorts get rich.

    The question is whether there will be a massive crash or a long slow grinding bear market, much like the 90s but worse. I am inclined to believe it will be the latter.

    Hot debate. What do you think? Thumb up 20 Thumb down 5

    @Patriotz

    Is it posssible to recant and move on to the fun part of my post?

    I don’t want to argue about the upvote/downvote system, because it isn’t an interesting debate and I don’t really care that bullish posts get downvoted. I do think it is a fact that they are. It’s practically impossible to search the forum for an exchange like you ask for – it’s been a couple of years since a bullish person has come in to try to debate in good faith, but Pdub #72 today is an example of a thoughtful post being downvoted. There is nothing trollish about the comment, it just centres on an alternate definition of when there is a bubble. Lots of downvotes because I assume people disagree with the definition suggested, but no discussion. This is fair enough: its par for the course on an anonymous internet forum.

    I want to know who your fantasy debate team would be, but if that discussion isn’t interesting to people, then no worries.

    I recently watched Rabidoux’s presentation on youtube and was impressed by the analysis. I was curious what the ‘best’ bullish person could come back with. For example, Rabidoux made convincing counter-arguments to the ‘running out of land’ theory. I’d like to hear what the very best of the bullish thinkers responds to that. As you point out, maybe there isn’t a good counter-argument. But there are still lots of people out there who think real-estate only goes up, so that’s why it makes sense to me that there would be interest in a public debate.

    At this point, I would call an anti-bubble argument an extreme long-shot to be the winner in such a debate, but I’d still be curious to see what they could do.

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

    Clockbike Clockbike Says:
    76

    @Just Looking

    Best counter argument for Rabidoux’s presentation, (which I attended and enjoyed immensely.) Would be that there is a price premium for single detached homes from gentrification.

    Like or Dislike: Thumb up 5 Thumb down 3

    RealityCheck Says:
    77

    One graph I would like to see is the number of SFD homes divided by the total housing stock (townhouses, condos, apartments, basement suites, lane way houses, coach houses).

    My bet is that SFD is a shrinking stock in Metro Vancouver and because of this the entry point to buy is much higher. Thus, average home a average income can afford is not an entry level SFD. If the trend keeps continuing, expect SFD to command a greater premium percentage wise over strata…even after a correction.

    Obviously, monthly payments and their servicing has been a major cause of the run up in prices.

    But, Land use policies are also contributing.

    Like or Dislike: Thumb up 5 Thumb down 4

    patriotz patriotz Says:
    78

    Fair enough, but the issues you bring up can be bypassed simply by looking at price versus rent. They don’t make sense for SFH any more than they do for condos, and yes that’s after accounting for possible future densification.

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

    @ #18 The Gimp

    You obviously don’t know Seattle that well. I5 or not, it is comparable to the Dunbar area of Vancouver except with Highway nearby and not as nice homes (RE is location, location, location no?).

    What are Dunbar area homes of the same style going for?

    Like or Dislike: Thumb up 8 Thumb down 1

    Lots of down votes today on good posts…

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

    I’d like to hear what the very best of the bullish thinkers responds to that.

    Here’s a bullish argument: the recently created greenbelt in Toronto (similar to the ALR in Vancouver).

    http://greenbelt.ca/maps

    Created in 2005, it’s 1.8 million acres of land circling greater Toronto that protects farmland, forests, etc from development. If you look at the maps above, you’ll see that its boundaries are currently quite close to the outer extent of Toronto’s sprawl. Toronto is a city that’s been growing by about 100k per year. So even though they aren’t running out of land, they’re definitely running out land to build more single family detached housing.

    Notice that the ALR in Vancouver is different, because it only covers farmland. This is why you see so much development on hillsides, which are more expensive to build on than flat land but not protected (e.g. Heritage Mountain in Coquitlam, Eagle Mountain in Abbottsford).

    Not that I still think Toronto is going to crash. I just think that after the crash, it could see significant price increases as population growth outstrips available land (for SFD housing at least).

    Like or Dislike: Thumb up 6 Thumb down 0

    Sorry, that last sentence should be “Note that I still think Toronto is going to crash”

    Like or Dislike: Thumb up 7 Thumb down 0

    RealityCheck Says:
    83

    Patriotz:

    Prices to rent ratio is out of whack because no one pays tax on rental income.

    The investors that rent out condos or the homeowner with 2 basement suites DO NOT PAY any tax on the income generated. It is simply not reported and the government couldn’t care less.

    So the rental income received is like after tax income. A $1000 a month UNTAXED rental income is really like $2000 a month TAXED rental income if in the 50% tax bracket (it will be counted over and above your working income).

    That’s why these rental situations make sense to investors/landlords. If taxes were even loosely enforced, this whole scheme becomes unbalanced.

    Hot debate. What do you think? Thumb up 6 Thumb down 9

    patriotz patriotz Says:
    84

    “The investors that rent out condos or the homeowner with 2 basement suites DO NOT PAY any tax on the income generated.”

    There’s no income to pay tax on, which is why prices have to go down.

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

    not sure if this has already been posted

    http://www.bnn.ca/News/2013/1/4/Canadas-housing-market-Watch-for-falling-prices.aspx

    Like or Dislike: Thumb up 5 Thumb down 1

    @Reality Check

    It would be interesting to know what impact the unreported nature of income from basement suites would have on prices.

    A couple questions: Wouldn’t the tax be net of expenses? Set up correctly, wouldn’t this include interest on the portion of the property rented? I’m not an expert on tax, so I’m not sure.

    If tax would be net all expenses, including interest, then there probably wouldn’t be a huge amount of tax payable (rental rates don’t cover expenses) – possibly why CRA hasn’t been hunting this kind of evasion down.

    While the market was rising, the tax benefit of not reporting rental income seemed to me like it was in protecting the tax exempt status of capital gains on the principal residence. Not a minor consideration in a charging market, but there’s not much point protecting your cap gains these days.

    Like or Dislike: Thumb up 1 Thumb down 1

    RealityCheck Says:
    87

    Patriotz,

    There is income to pay tax on.

    The majority of investors/ basement suite landlords that I know bought before the run-up in prices..their places are mostly paid off. Barely any, if at all, monthly mortgage expenses.

    However, a small percentage of recent buyers would fit into the situation you outlined.

    Now, if someone has $400,000 equity in their condo…selling and putting it into a GIC at 2% (AND GET TAXED) doesn’t make sense. Add to this a host of other factors like 40-50,000 people per year moving to Vancouver and then you think….Isn’t it just better to keep the tax free income coming in?

    What I’m saying is the investor properties be it basement suites or whatever are generating tax free income. What’s more is that the monthly $$ coming in will only go up in the coming decades vis-a-vis inflation.

    Hot debate. What do you think? Thumb up 7 Thumb down 13

    RealityCheck Says:
    88

    Just Looking,

    Most just avoid all that net income stuff; (Gross rental income – Expense).

    The Basement suite landlords don’t want to get the CRA involved.

    Like or Dislike: Thumb up 4 Thumb down 1

    HAM Solo Says:
    89

    From the Toronto Star, an article depicting a Dubai scale condo project in the planning phases.

    http://www.thestar.com/news/gta/article/1310861–vancouver-developer-mulling-huge-project-at-one-yonge

    Yes, what could be a better use of scarce capital in a time of collapsing demand and prices for Toronto condos than the biggest condo project everrr!

    I am not an editor or reporter for the Globe or the CBC, but if I was, I think a “follow-the-money” story about this proposed development would be really revealing. I think what we would ultimately find is that the project only makes sense because the CMHC backstop on any and all big bank loans to the project’s developers. A very interesting interview would be with the loans officer of the bank who is backstopping this development, as he must be keenly aware of the supply/demand problem in Toronto condos. However the reason he would want to write the loan is because his bank would be looking to flip the loan into a securitization vehicle and his bank would get just a fee, and he would get a cut of that fee. Never matter that it is almost impossible for such a project to break-even in any way. Three or four years from now, after spending a billion?? on this project, the cash losses to the development group would be in the hundreds of millions. But to that loans officer…not his problem.

    It would also be interesting to interview the CMHC official responsible for insuring developer loans. Also, an interview of the investors who buy the securitized mortgages (and they will tell you, for sure, that the ONLY reason they are buying the note is because of the Canadian Government guarantee).

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

    Anonymous Says:
    90

    RealityCheck

    income = revenue minus expenses. The people with basement suites are the ones mortgaged to the max. Remember we are at record household debt levels.

    Rental condos and basement suites have been around for a long time and are present in non bubble areas. The same tax policy and enforcement applies to those areas.

    Like or Dislike: Thumb up 8 Thumb down 1

    Anonymous Says:
    91

    Realtycheck: “Now, if someone has $400,000 equity in their condo…selling and putting it into a GIC at 2% (AND GET TAXED) doesn’t make sense.”

    Great analysis. Compare a high risk investment to a no risk investment. The GIC still pays about the same yield as a condo with NO risk of capital and no transaction costs. So what you are saying is if you commit tax evasion you can beat a GIC by buying a condo without factoring in the risk of the condo, transaction costs, lost rent due to vacancy, maintenance expenses, etc. Hey are you available to be my financial adviser?

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

    RealityCheck Says:
    92

    Also, I would like to add:

    Would anyone who bought in Toronto in 1989 or Vancouver in 1994 and held regret it today??

    Inflation is going to to wonders in the 2 decades ahead. Billionaires (Soros et al.) are snatching up US farmland like crazy. Large companies are buying homes in bulk from banks.

    We all are wishing to buy, otherwise we wouldn’t be spending time posting on these blogs.

    Here is what I’ve learned and am Luckily young enough to practice this philosophy:

    Buy at the bottom of the cycle… make sure you can service the debt…watch inflation erode the relative value of your debt away. Your kids will thank you years from now. May be an even better investment to buy a house in the US now, rent it out, and give it to your kid in 30 years time. Maybe the best investment. Seeing this now as parents who did this years ago are passing the spoils onto their kids now.

    Hot debate. What do you think? Thumb up 8 Thumb down 13

    RealityCheck Says:
    93

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

    Poorly-rated. Like or Dislike: Thumb up 4 Thumb down 14

    painted turtle Says:
    94

    In the segment I am following, houses that just arrived on the market are cheaper than the ones who have been listed since the Fall. We end up with funny situations where a new home is the same price, or even cheaper, than an older building. Over all, prices are still too high, but not utterly laughable as they used to be. I am ready to wait for one or two more years ;)

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

    i sold a one bedroom in May 2011.

    sold privately for $390,000. I had bought many years earlier so place was paid off, my only expenses were property taxes, hydro and maintenance fees = $400 month average.

    -I rent back from investor for $1400 a month

    – i invested the $390,000 into the market, i’m yielding approx 5% a year (almost all tax free)… $1625 a month.

    -so, instead of paying $400 a month, I’m now living in the same place and making $225. A savings of $625 a month.

    -also, the last sale in this building was in Oct 2012, it sold under asking for $327,000 (same size unit as mine). Including realtor fees it sold for $75,000 less than what i got, my place was nicer by maybe $15,000.

    Also (not including dividends) my portfolio is up about 12% since May 2011 (roughly $47,000).

    I’m not trying to sound smart, I’d imagine that anyone that has done the same in the last few years is probably in a similar position as I’m in. I could not be happier that I sold:)

    I’ll sell my stocks, trusts etc.. when the market corrects and buy another place. If it doesn’t correct then I’ll keep renting…I’m actually enjoying renting it’s a nice change, no strata crap.

    Who would put $400,000 into a GIC or HISA? that’s ridic, unless you need the money in the very near future.

    Well-loved. Like or Dislike: Thumb up 27 Thumb down 7

    RaggedyRenter RaggedyRenter Says:
    96

    At which ratio does price-rent make sense?
    It would probably be different for each type of housing (SFH, townhouse, 2bd condo, 1bd condo). Prevailing interest rate and mortgage terms would obviously skew price to rent ratio.

    So how much is the general rule of thumb on price-rent ratio?
    I heard 100-to-one and “10 year rent” being bandied about before, but I guess that was when 6% interest rate is the norm. I think someone in this forum said before their price-rent ratio was 400+. Does this mean the property needs to correct 75% before it make sense to buy?

    Like or Dislike: Thumb up 2 Thumb down 1

    southseacompany Says:
    97

    Link to the Maclean’s cover story article:

    “CRASH AND BURN: The housing bubble has burst, and few Canadians will emerge unscathed”

    http://m.publishing.rogers.com/macleans/share/2013-01/06a_biz_housing.html

    Well-loved. Like or Dislike: Thumb up 26 Thumb down 0

    Slides & video from Ben Rabidoux’s presentation in Vancouver, Nov ’12:

    http://vancouverpeak.com/Thread-Canadian-Real-Estate-What-Happens-Next

    Like or Dislike: Thumb up 7 Thumb down 0

    Anonymous Says:
    99

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

    Poorly-rated. Like or Dislike: Thumb up 7 Thumb down 20

    Anonymous Says:
    100

    RealyCheck:
    “Your kids will thank you years from now. May be an even better investment to buy a house in the US now, rent it out, and give it to your kid in 30 years time. Maybe the best investment. Seeing this now as parents who did this years ago are passing the spoils onto their kids now.”

    I doubt you will have anything left for the kids after real estate corrects.

    Having said that I would prefer to let my kids earn their own living and pay for the things they want with their own money. The kids will be better for it. Besides If I was waiting for my parent to pass on their house to me I would still be homeless in my 40s. My grandmother is still alive and if my parents waited for her to pass on her house they would be homeless in their 70s.

    Hot debate. What do you think? Thumb up 24 Thumb down 12

    Anonymous Says:
    101

    Shocking, there are smart realtors not believing what they are told:

    http://keithroy.com/blog.html/time-to-cash-out–1976393 (July 4, 2012)

    “I’m a REALTOR and I sold my own home 4 weeks ago. It wasn’t too big or too small. It’s only 6 years old and still feels new. I sold because in 6 months my home will be worth less than it is today. I think its time to cash out! Let me explain…..

    To ignore the truth doesn’t change the truth. And so it is in the Vancouver real estate lately. The facts are simple; real estate is easier to sell when prices are going up, realtors are happier when more houses are selling and open houses are more fun when buyers come to look. However, the good times pass like the bad ones do. I would suggest that good times have passed in the Vancouver real estate market, at least for the foreseeable future.”

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

    Anonymous Says:
    102

    I sold because in 6 months my home will be worth less than it is today.

    Keith Roy has good timing, here we are 6 months later and that house is definitely worth a lot less now.

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

    Despite these dire stats on sales volume and price wobbles, we don’t seem to be at our “Housing Minsky Moment” yet – when sellers panic and aggressively drop prices triggering the downward cycle.

    I checked the archives and in July 2007 Dr. Housing Bubble defined the Housing Minsky Moment for California:
    1. Prime contagion (i.e. even good borrowers start getting into trouble).
    2. Record breaking foreclosures.
    3. Negative media.
    http://drhousingbubble.blogspot.ca/2007/07/housing-minsky-moment-3-factors-prime.html

    We’re probably a year away from a Vancouver Housing Minsky Moment. We’re starting to see #3, but only getting whispers of action in #1 and #2.

    This will be a wild card for 2013. A Housing Minsky Moment will create panic and lead to people truly heading to the exits. Right now, sellers are staying cool and listings are much lower than I expected (even though sales have fallen off a cliff).

    What else could cause the Vancouver Housing Minsky Moment?
    – flat sales in Chinese new year causing panic in local Chinese speculator market?
    – interest rate bump (but we seem years away from that unless Carney’s successor is a fool)
    – global event? (we’re seen lots of global events over the last few years and they didn’t really impact locally – China slowing, US dramas, Japan troubles, Syria, Libya, PIGGS etc. etc.). The world’s gone crazy and that seems to be an accepted steady-state.
    – unemployment? Yep – but this wont rocket until construction starts dry up (Chicken/egg issue).

    So my two bits for the Housing Minsky Moment is: foreclosures start reaching alarming levels, followed by construction trade unemployment as new housing projects dry up.

    This still seems like it is a year away. Sellers simply aren’t panicking right now.

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

    always nice to get featured on WSJ
    January 4, 2013
    Toronto, Vancouver Housing Markets Lose Steam

    Hot debate. What do you think? Thumb up 12 Thumb down 0

    Anonymous Says:
    105

    Vangrl ” i invested the $390,000 into the market, i’m yielding approx 5% a year (almost all tax free)… $1625 a month.”

    How is it almost all tax free? Do you have no other income? There are no tax free investments. There are ROC, Dividends, interest and that’s it.

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

    vangrl Says:
    106

    mostly all eligible dividends, a few income trusts and reits that pay interest, and a few stocks that distribute a bit of ROC along with dividends but that’s deferred tax.

    And yes right now I’m working very, very part time….by choice. I have more investments then what I’ve stated and the dividend tax credit I receive offsets almost all my taxes, even from my part time job.

    Hot debate. What do you think? Thumb up 9 Thumb down 5

    Wakeup call Says:
    107

    Just saw Mark Jasayko on Global TV forecast lower housing prices and higher mortgage rates. Jasayko is the portfolio manager with McIver Wealth Management, and his forecasts have been bang on 9 years out of 10.

    Nice to see Global letting us hear from a real economist instead of the usual garbage from Cameron Muir.

    Well-loved. Like or Dislike: Thumb up 49 Thumb down 1

    addair Says:
    108

    Anybody got a link to Mark Jasayko on Global?

    Like or Dislike: Thumb up 4 Thumb down 1

    real_professional Says:
    109

    Wake up call = Mark Jasayko

    Hot debate. What do you think? Thumb up 8 Thumb down 4

    I did some analysis on US cities and how their decent from peak price looked and then compared that to Vancouver’s soft landing…

    http://vancouverpricedrop.wordpress.com/2013/01/05/moderate-price-drop/

    Feel free to share the link – I can’t say with certainty where the market is going but people need to know the truth about what is happening today

    An Observer

    Well-loved. Like or Dislike: Thumb up 53 Thumb down 1

    Crasher Says:
    111

    Good work “Observer”

    looks like we’ll be sucking slew water come November.

    Really surprised by the difference between San Diego and LA considering the close proximity:
    After 6 months, SD was only down 7.4% compared to 26.1% for LA, but after 36 months from peak SD had dropped more than LA.
    Go figure.

    Like or Dislike: Thumb up 5 Thumb down 1

    Vote Down The Facts Says:
    113

    Observer, how are you calculating the Vancouver numbers?

    Like or Dislike: Thumb up 1 Thumb down 2

    Group Masterbator #43 Says:
    114

    “Vancouver condo and townhouse prices have fallen back to where they were more than five years ago. That’s a pretty good correction.”

    MARK JASAYKO said in
    http://www.vancouversun.com/business/Mixed+economic+signals+will+mark+2013/7779578/story.html

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

    #113, I’m using the MLS HPI and selecting Vancouver West Detached

    Like or Dislike: Thumb up 6 Thumb down 0

    patriotz patriotz Says:
    116

    “After 6 months, SD was only down 7.4% compared to 26.1% for LA,”

    Those numbers are for the first 18 months of decline, not the first 6. Also note that LA started falling well after SD, so that comparison is not over the same time frame. Take a look at the interactive graph:

    http://seattlebubble.com/blog/2012/05/29/case-shiller-home-prices-hit-predictable-spring-bounce/

    Note that Miami was the only city in the chart to fall >10% in the first year. I don’t expect Vancouver or any other major Canadian market to fall >10% in the first year of declines going forward (although we did see this in the mini-bust of 2008).

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

    patriotz patriotz Says:
    117

    “Vancouver condo and townhouse prices have fallen back to where they were more than five years ago. That’s a pretty good correction.”

    It’s not a correction until buying is cheaper than renting. Because if buying is more expensive – that’s not correct.

    Hot debate. What do you think? Thumb up 25 Thumb down 6

    Vancouver West will likely be down 15% after 12 months – it’s already 11.1% with 4 months to go

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

    Wakeup call Says:
    119

    Thanks for the link Clockbike #112

    It appears that Jasayko made 9 out of 10 correct predictions for 2012 and not 9 correct forecast in 10 years as per my previous post.

    PS:
    Real_professional = a Real Dork

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

    real_professional Says:
    120

    @ wakeupcall

    Sorry to hinder your self promoting Mark

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

    Keeping An Eye On The Pimps Says:
    121

    Wake up call said:
    “Nice to see Global letting us hear from a real economist instead of the usual garbage from Cameron Muir.”

    Agreed, but we can’t give them a high mark just yet.

    They are like the two daily rags. They will publish bearish housing news buried deep somewhere in a little crevice, but big time bullish articles Thursdays and Saturdays.

    I don’t watch the news on the local RE Pumping channels, but I would imagine Saturday nights aren’t big for audiences.

    Like or Dislike: Thumb up 7 Thumb down 2

    Vote Down The Facts Says:
    122

    Observer, so is it a comparison of Van West SFH against entire US cities? Or is the US data for SFH only too?

    Like or Dislike: Thumb up 7 Thumb down 0

    “That’s a pretty good correction.”

    And -2005 was a pretty good bull run. Then government largesse and interest rate manipulation started turning the market into a bloated corpse, and we had another bull run. Quite remarkable. But as I recall, the same thing happened to stocks in the 1990s.

    Like or Dislike: Thumb up 2 Thumb down 1

    The Case-Shiller data I used was for single family homes in those cities.

    If you look at the entire Greater Vancouver area (including Whistler, Bowen Island, Pitt Meadows etc) then the number drops to -3.8% for 6 months and -6.3% for 8 months.

    If you limit it to Vancouver West, Vancouver East, West Vancouver, North Vancouver, Richmond, New Westminster and Burnaby (what most people would consider the core Vancouver area I believe) the 6 month number is -4.2% and 8 months is -7.1%

    I know what you are getting at – by focusing on Vancouver West I am using a subset of the region and comparing against larger sample sizes in the US. It’s a fair argument but the reasoning behind this is that I believe Vancouver West is a great barometer of the bubble. When people outside of Vancouver think about Vancouver in terms of crazy real estate prices, they are thinking about Vancouver West.

    If you don’t agree with this filtering then just consider the core Vancouver results above. We’re still the 3rd worst performing in 6 months after peak and likely 2nd worst after 12 months based on the trend.

    Well-loved. Like or Dislike: Thumb up 38 Thumb down 0

    oneangryslav2 Says:
    125

    @111

    After 6 months, SD was only down 7.4% compared to 26.1% for LA, but after 36 months from peak SD had dropped more than LA.

    I guess it just goes to show (to paraphrase one of the real estate industry’s favourite slogans) that all real estate bubble bursts are local. Or to paraphrase Tolstoy*: “all rising real estate markets resemble one another, each crashing real estate market crashes in its own way.” ;)

    *The topic of Tolstoy’s famous quote was families: “All happy families resemble one another, each unhappy family is unhappy in its own way.”

    Like or Dislike: Thumb up 8 Thumb down 1

    Crasher Says:
    126

    Tolstoy was cool, but the reason for my surprise is that LA and SD are so close to each other. But then, LA probably covers more ground and is more diverse than any other city in the world with many areas within the city going their own direction.

    Like or Dislike: Thumb up 3 Thumb down 1

    Anonymous Says:
    127

    “the reason for my surprise is that LA and SD are so close to each other”

    Comparing LA and SD is like comparing Vancouver and Kelowna. Both in the same state/province but very different cities. Although, all 4 were/are in a bubble for the same reason – cheap and easy credit.

    Like or Dislike: Thumb up 6 Thumb down 2

    Anonymous Says:
    128

    An Observer Says:
    January 6th, 2013 at 1:57 pm

    “The Case-Shiller data I used was for single family homes in those cities.”

    Great job. Thank you for your time, Observer.

    Like or Dislike: Thumb up 8 Thumb down 1

    patriotz patriotz Says:
    129

    “Tolstoy was cool, but the reason for my surprise is that LA and SD are so close to each other.”

    The busts in LA and SD were in fact very similar. The difference is that SD peaked and then declined ever so slightly for the better part of a year, then LA peaked, then they both went down pretty much in lockstep.

    Looking at the stats simply on a decline post-peak basis is misleading. Look at the graphs that I linked to and you see what really happened.

    Hot debate. What do you think? Thumb up 7 Thumb down 3

    A voice of reason Says:
    130

    This week will see our first 300+ listing days of 2013. You can take it to the bank.

    Hot debate. What do you think? Thumb up 21 Thumb down 3

    @Patriotz, if you look at the Case-Shiller data from the US you can see the seasonality — after the first year of declines, the spring of 2007 saw a slight leveling off (though still a negative slope). If 2013 is going to be a poor year for Vancouver real estate, I would expect flat or slightly negative price changes through the spring. Those conditions would see MOI in the spring averaging around 7. That would then almost certainly lead to significant price drops in the second half of the year and concomitant high MOI.

    Like or Dislike: Thumb up 5 Thumb down 3

    Helmut Pastrick Bottom Call sighted!!!!1!!
    Bottom call thread

    “It’s a mild market correction,” said Credit Union Central economist Helmut Pastrick.

    He predicts a continued soft real estate market for the next several months before buying and prices perk up in the second half of the year.

    Pastrick bases his forecast on improving growth in the U.S. that will spill over into B.C. later in the year, and spur continued economic growth and home price gains in 2014-16.

    He said the recent decline in prices may also help draw some prospective buyers back into the property market.

    – January 4, 2013

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

    Groundhog Says:
    133

    Almost time to update the Coaster yet?

    Like or Dislike: Thumb up 3 Thumb down 0

    @jesse re pastrick:

    Makes you wonder what variables are in his model. He bases his RE rebound claim on a big rebound in US and then Canadian growth.

    But if US and Canadian economic growth picks up substantially does Pastrick project the 5-yr to remain at 1.5%?? Very very unlikely. If it does go up, what does he seriously think would happen to the Van RE market.

    As others said earlier in this thread, the reason bull arguments often get downvoted is they lack any internal consistency. It’s just blowing smoke.

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

    “what variables are in his model”

    No clue but IIRC Pastrick was beaten down hard in late 2008 and turned uber-bearish on RE early in the year. He was predicting -10% drops or worse through ’09. Things turned up in ’09 and he had a giant introspective mea culpa. I expect he’s predicting the same sort of thing in 2013, with Vancouver miraculously rebounding after “mildly” correcting in 2012. I’m penning him and his ilk “oh-niners”.

    Poor Helmut is in effect predicting affordability is going to get perpetually worse and it’s always a good time to get into the market. Remember this?
    http://www.moneyville.ca/article/1005715–this-housing-expert-waited-too-long-to-buy

    I think the adage applies: senior officials can be fired for incompetence in principle… but not in practice.

    Like or Dislike: Thumb up 0 Thumb down 0

    Groundhog Says:
    136

    @VHB

    Zerohedge has an excellent post right now about US interest rates.

    I dont think US rates ever rise while the US as we know it exists. Theyve crossed the line where theyre now comparable to Japan.

    Canada will be hesitant to increase interest rates as long as the US had low rates.

    Like or Dislike: Thumb up 4 Thumb down 0

    @groundhog that ZH post says that US growth won’t pick up. Sure fine–but that’s not Helmut’s prediction. Helmut says 1) US and Can growth pick up substantially 2) This brings up Van RE.

    I say if (1) happens, then the yield curve steepens; BoC and Fed get ready to move. That spoils Helmut’s RE party.

    I’m not predicting higher interest rates. I am saying that if growth goes up a bunch, interest rates will not stay low. That’s the problem with all of the ‘prices stay flat until wages catch up’ scenarios. If wages start picking up enough to start moving toward prices, then interest rates won’t stay low.

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

    kansai92 Says:
    139

    A soft landing is like the Sasquatch.
    People talk about it, people believe in it.
    But no one’s seen a real one.

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

    Pastrick are like the fortune tellers / palm readers. They sell hope, not substance.

    Like or Dislike: Thumb up 3 Thumb down 0

    Reasonable Bullish Position Says:
    141

    The most reasonable bullish position is simply (as VHB has ponted out many times) MOI.

    If listings are weak, and sales fall around the 10 year average (whether driven by low rates, foreign money, gov’t buying incentives, improving economic environment, or a continued downward pressure on local IQs), MOI will face downward pressure.

    The data is fairly reliable. High MOI and prices are pressured down. Low MOI and prices are pressured up. 6ish MOI and prices stay flat.

    A bull friendly 2013 is certainly a possibility, and any bear that doesn’t see that must be new to this blog.

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

    Groundhog Says:
    142

    @VHB

    Yes, I think we’re thinking the same way.

    We’re in a position now where if the economy improves interest rates in Canada will need to rise (at least come off their emergency lows) which will put a damper on both RE through higher mortgage rates and the economy in general through a higher CAD$. Basically, we’re stuck.

    The US has put themselves in such a horrible fiscal position I believe the fed will politically be forced to do everything in its power to keep interest rates low to preserve the status quo. This affects Canada in that if we do need to increase rates, the interest rate differential will have a large impact on the USD/CAD exchange rate.

    Like or Dislike: Thumb up 1 Thumb down 0

    patriotz patriotz Says:
    143

    US has crossed the line where theyre now comparable to Japan. ”

    They’re not at all comparable to Japan. Japan is one of the world’s biggest creditors and their government does not borrow from foreign lenders.

    Like or Dislike: Thumb up 3 Thumb down 0

    Anonymous Says:
    144

    ….That’s why these rental situations make sense to investors/landlords. If taxes were even loosely enforced, this whole scheme becomes unbalanced…..

    There’s no way that rental income would exceed expenses so there’s nothing to enforce.

    Like or Dislike: Thumb up 2 Thumb down 0

    Anonymous Says:
    145

    ….I’ll refrain from posting and keep this a one sided blog…….

    Promises, promises!

    Like or Dislike: Thumb up 1 Thumb down 2

    Sunny123 Says:
    146

    To Vangrl

    “I rent back from investor for $1400…“ there are tons of 1 bed rooms for rent for well under $1400…is that something to brag about since your message is all how smart you are (even though you denied the hell out of it) with your $…

    Like or Dislike: Thumb up 2 Thumb down 1

    Anonymous Says:
    147

    “The US has put themselves in such a horrible fiscal position I believe the fed will politically be forced to do everything in its power to keep interest rates low to preserve the status quo.”

    There is no doubt they will try. Every country with massive debt tries to do this. Try and do it are different. See Spain and Italy. The US does have a huge advantage by being the reserve currency but at some point it is no longer in the fed’s control. Bond buyers demand more yield based on risk of default. At some point in the not too distant future the US balance sheet will be so bad investors will want more than 2%. Like Zero Hedge pointed out even a move to 3% will cause huge problems.

    Like or Dislike: Thumb up 0 Thumb down 0

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