BC, Canada, data, prices, USA

Vancouver house prices ‘flat’ like San Diego

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b5baxter updated his crash curve graph over at Vancouver Peak.  This is what he posted in the comments section on this site:

Latest REBGV HPI imposed on my price drop model:
http://vancouverpeak.com/Thread-Crash-Curve-Graph?pid=389#pid389

The HPIs continue to show remarkable correlation to the model.

I know some people feel that the bubble is “popping” very slowly here. But so far at least it seems to be following the same trend we saw in US cities that saw a 40% drop in prices.

If it continues to follow that trend we won’t have to wait 7 years to see bottom – just a little over two years.

…That’s right. The current rate of price declines in Vancouver that some have described as ‘flat’ is actually falling at the same rate that US bubble cities fell at their peak.

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Comments were accidentally switched off for this thread, they should be working now.

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5 years 7 months ago
C.Junta
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OT anecdote. Just came back from a family trip to Big White. As usual, I enjoyed occasional conversations with random people on lifts. Here is one of those chats. A gentleman in his fifties from some small town close to Edmonton. We started with sharing recent skiing experiences and discussing runs and current conditions. He turned out to be a retired person on his three-month getaway on Big White. Not bad, I thought to myself, perhaps just another retired business owner. I have mentioned that the village and the mountain looked deserted. Really, the resort is very quiet this year and I will not be surprised when I hear some not very optimistic news about debt restructuring, bankruptcy etc. It is a bit busier on weekends when locals from Kelowna come there, but on weekdays you will see mostly retirees… Read more »
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5 years 7 months ago
Apocarypse Mao
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Global National reports on China Housing Bubble:

“Global National : China’s housing bubble” Feb 4/13

http://www.youtube.com/watch?v=k9Xy2RDBJQU

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5 years 7 months ago
vangrl
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Real Estate Weekly- newest edition Feb 8th- front page

“TIPS ON BUYING WITHIN A JOINT VENTURE”

highlights:
-say 2 friends are renting apartments at $1200 a month, they realize they can combine their savings and buy a house!
-after holding the property for a while, they can then sell and share in the equity appreciation!
-pooling resources to buy a first home can be a smart move towards financial security
– According to slimyAssed realtors (except Paul),it’s a plan that’s used widely and is very successful!

WTF- can you think of anything more dodgy than jumping into a real estate investment with 3 friends? at this time in the market? or at any time?

this is the Westside/Downtown edition.

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5 years 7 months ago
gokou3
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Could someone kindly explain what’s the price drop model based on? When I clicked into the link, it looks like it’s related to the San Diego SFH price history from peak.

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5 years 7 months ago
Democrass
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“WTF- can you think of anything more dodgy than jumping into a real estate investment with 3 friends? at this time in the market? or at any time?”

It works because real estate always goes up 🙂 There is a sucker born every minute.

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5 years 7 months ago
rails
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it isn’t clear what this “model” reflects. Is it an average of Case-Shiller values with 3 standard-deviations as the “band”, a max-min or what? Is it based on a structural variable method? otherwise it is data mining – undercircumstances should it follow the US trajectory?

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5 years 7 months ago
gokou3
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Hahaha… The $1 richmond listing did not sell:

http://www.shuchatgroup.com/Blog.php/richmond-condo-for-sale-for-1…-cont-d

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5 years 7 months ago
HAM Solo
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Genworth MIC earnings call this morning. Interesting listening, there should be a link to the replay at the MIC website. Important thing to understand about this company is that, in theory, it is reporting mortgage insurance premium revenues and claim payment costs based on a three year lag. The reasons for the lag is because at some point they the three year point was the point of maximum loss. However, given that we know business turned down and losses shot upwards in the 2009-2010 window (esp in Alberta), that would cause them to report declining earnings in 2012-2013. So what they have decided to do is to change their assumptions about long-term loss performance so that earnings from the bad period grow, magically. Not sure if the Bay Street analysts take that entirely as being fair cricket, and there were… Read more »
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5 years 7 months ago
Turkey
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There’s a BC-heavy post from Ben Rabidoux at the usual place. Spot on, as usual.

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5 years 7 months ago
Dumbest time in 31 years to buy RE
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Nice graph. A +40% SD like drop could be a tall order, but I would not be surprised if our race to the bottom will be faster. Let’s not forget that the US housing bust came out of left field in early 2006 with a stable economy and gathered steam despite falling rates. With warnings splashed all over magazine covers and financial publications, our bust is much more widely anticipated. That dramatic drop in int rates after the US financial disaster gave our market a last gasp since 2009. Those rates now look poised to start climbing again. Asian and Euro money that hit our shores in 2011 is long gone perhaps in search of greener pastures (if there’s any left). The price to income ratio is still ludicrous. The economy looks fragile, and demographics couldn’t be worse. Not that… Read more »
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5 years 7 months ago
N
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40% still leaves us miles above fundamentals.

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5 years 7 months ago
jesse
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So don’t get me wrong, I LOVE the comparison to San Diego, however we should keep things in perspective. If we align Case-Shiller data from San Diego against Vancouver, San Diego saw significantly faster run-ups than did Vancouver over the past decade. Further there was more home building in San Diego than Vancouver in general and that contributed to more supply overhang, and finally the second “leg” down coincided with the US recession and a crimping of their mortgage market. Another comparison that could be made is to San Francisco or Seattle/Portland, that never fell as brutally as did SD, and although they did fall it was not -40%. To directly compare Vancouver and other US cities aligning peaks is a good way, though I took another approach and aligned the “troughs” to each other. To stress test Vancouver I… Read more »
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5 years 7 months ago
Bull! Bull! Bull!
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i don’t really understand why this graph is significant. is there some reason why vancouver should track well against SD? if you have a data set you can find SOMETHING that it will correlate with. but it doesn’t mean anything.

the graph has value as a novelty or curiosity. it has no predictive power and doesn’t give us actionable information.

why not post real sales info instead? why don’t all of you try being friends with real estate agents instead of always trying to piss them off? maybe you’d get some real sales data passed your way as a result.

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5 years 7 months ago
mac
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I want to thank B5Baxter for creating this graph. Thank you.

It really helps visualize where we are esp. as C/S data is comparable to Teranet’s data. Also it’s amazing to see that the FrankenHPI seems to indicate the same decline despite the multiple changes board made to how it’s calculated.

Even more amazing is the fact that not one local journalist bothers to come by this site, see this graph and become curious enough to do their own research.

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5 years 7 months ago
Anonymous
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…40% still leaves us miles above fundamentals….

I agree! It’s going to take 70% to flush this turd of a bubble to Iona where it belongs.

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5 years 7 months ago
mac
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Bull, Here are the crib notes for you. Go back and read what Baxter says, namely: “…some people feel that the bubble is “popping” very slowly here. But so far at least it seems to be following the same trend we saw in US cities that saw a 40% drop in prices.” Primary message: This graph shows the rate of decline here compared to the ultimate, and disastrous, decline in San Diego. But makes no prediction about the future. As we know the Teranet and HPI lines could flatten out at any time. However, spokespeople for real estate interests and our media repeat that we are in a flat market using the recent past performance to predict the future. This graph challenges the underlying assumption that our current “slow” decline is proof that it will stay that way by demonstrating… Read more »
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5 years 7 months ago
MadasHell
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“If you commit terrorism, you should lose Canadian citizenship: Kenney”
Dahh!!! I think we need a new imm minister.

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5 years 7 months ago
Johnny_O
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Hello everyone, it’s been a long time (2005/2006) since I’ve commented but I still watch some of the topics posted on this blog. Anyway, I’ve come across a few articles, see below, in the last few years that has only confirmed what I’ve always thought of what drove the buying frenzy in Vancouver in the last decade. I actually had a dinner concersation wirh a Colliers commercial sales rep A while back in 2010 where I suggested the US should do the same as Canada in terms of saving their housing collapse by allowing High net-worth asian investors buy housing properties in exchange for a Canadian cirizenship. Well it looks like the USA is starting To see some areas rebound pretty good wirh an influx of new HAM. http://www.zerohedge.com/contributed/2013-02-06/corruption-so-pervasive-it-makes-us-look-good-compariso Now I’m not saying this alone helped drive the Vancouver/Richmond property… Read more »
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5 years 7 months ago
VHB
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February days with sales<100

2011: two
2012: three
2013: two**

** (We're only 3 business days into the month…16 days to go…)

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5 years 7 months ago
LocustLand
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Johnny_O Says

Agree 100% Johnny_O. And our esteemed Immigration Minister was prancing around the entire time wearing his little red housecoat – absoutley disgusting.

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5 years 7 months ago
Bull! Bull! Bull!
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@mac

Thanks, I get it now. The take-away is that the decline in price is very slow. But the HOPE is that the slow decline will lead to fast decline as it did in other markets, so bears shouldn’t fret just yet. I have to admire the hopeful nature of the bears. Hoping for almost a decade while others have won the lottery and cashed out.

Keep hope alive bears! Don’t miss the bottom 😀

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5 years 7 months ago
gokou3
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Re #22:

Ya, you bulls certainly won’t miss the bottom by holding.

— Cashed out in 2011.

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5 years 7 months ago
Anonymous
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jesse: “the second “leg” down coincided with the US recession and a crimping of their mortgage market.”

Do you not think we will have a recession and a crimping of the mortgage market here after real estate prices in Canada take their first leg down? As things get worse we will see further tightening and we will see a massive loss of jobs. I don’t see how we can avoid a recession and there is no way lenders do not tighten if real estate is falling in value.

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5 years 7 months ago
VMD
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Just did a big piece on 2013 RE predictions on a couple Chinese forums and for my RE column. Also submitted to “Epoch Times” newspaper where printing date is being arranged. Below is the brief English translation: Bullish Factors for Vancouver RE: 1. Chinese economy/stock market showing some sign of ‘recovery’ in early 2013. Some ‘HAM’ may ended up in Vancouver RE. 2. HST expires in April, good for new home market. 3. Interest rates remain at historical lows. (But also means can’t drop like 2008-09 again) 4. QE4 and coordinated monetary easing may offer short-term boost to stocks/economy. But its sustainability and how much flows into Vancouver RE is questionable. Bullish Factors for Vancouver RE: 1. BC population grow continues to slow, worst in 8 years. Inter-provincial outflow accelerates. 2. Immigration policy continues to tighten in 2012-13. Immigrant investors… Read more »
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5 years 7 months ago