Don’t be too bearish

Pimco says US and Canadian investors working under the assumption of a Canadian housing bubble may be too bearish.

“The great white short” is gaining popularity amongst hedge funds, but maybe they are being too pessimistic?

“Our secular view is that housing in Canada is overvalued and due for a correction,” he said. “We believe a 10%–20% real decline in national housing prices over a five-year period is very realistic, with much sharper corrections in some local ‘hot’ markets such as Toronto, Vancouver and Montreal.”

Read the full article in the Financial Post.

Meanwhile in yesterdays thread who is making money shared HPI results from the most recent 1, 3 and 5 year period:

For those of you who didn’t get the memo:

HPI INDEX June 2013 Lower Mainland (Total return)

1 yr. return -3.0%
3yr. return +4.6%
5 yr. return +5.7%

Total return with inflation
1 yr. -5.5%
3 yr. -2.9%
5 yr. -6.8%

I ask again, “WHO IS MAKING MONEY?”

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ブルガリ キーケース
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ブルガリ キーケース
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Need Cash Today
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Need Cash Today

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car insurance for a day
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car insurance for a day

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[…] steady as she goes -Canadian housing market in danger -The Canso race car analogy -Vancouverites get worked up -Duncan mall in foreclosure -Detroit files for […]

Laurey
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Laurey

hey you were posting about ficttious inflation. what are you talking about? we have deflation since 2008.

Who is making money?
Guest
Who is making money?

“oh well you can always rent 2 mil place for 1,200. can you”

Maybe not $1200 but certainly $3000.

Sounds just fine to me.

Laurey
Guest
Laurey

recently the comments are few. i guess dreams of crash and buying west side pad for 400k are shattered. oh well you can always rent 2 mil place for 1,200. can you?

rp1
Guest
rp1
#6 George: “China’s real estate bubble is reinflating. Is this bullish for Vancouver real estate?” Probably. Chinese (over)building has sustained high commodity prices, and with that comes a high Canadian dollar. Consider this argument: http://www2.macleans.ca/2013/07/17/a-high-dollar-means-higher-wages-not-lower-prices/ “I’ve been hoping that a correction in Chinese RE would lead to a correction in Van RE.” China is clearly overbuilding on a scale the world has *never* seen before. Economies are driven by credit which makes them susceptible to the dynamics of a Ponzi scheme. When the government prints money and prevents restructuring, the Ponzi dynamics are reinforced by reward, and the capitalist dynamics take a back seat. “The world economy is one big debt ponzi scheme and there are no signs that it is coming to an end anytime soon. Although I am a bear, I think that is the best argument for… Read more »
Ralph Cramdown
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Ralph Cramdown

“Otherwise, please inform me how I may obtain my suitcase of money”

I can’t promise a suitcase full, but a family with good credit can borrow a lot with credit card teaser rates for six months or a year. Your broker’s margin money should be well priced. Not free but very cheap.

pricedoutfornow
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pricedoutfornow
As we prepare to leave our rental condo for a rental house, our landlord is freaking out because he doesn’t have tenants for next month. He’s trying to blame US, since we are in the process of moving, the place isn’t really in showable condition, he insists nobody wants to rent it “because they can’t see past the clutter” (though only 2 people have been to see it the whole time it’s been listed). I call BS and think he’s aiming to have an excuse to keep our damage deposit. Guess we’ll have to take it up with the tenancy board. He’s sweating…doesn’t want to do any upkeep on the place after we leave, though nothing’s been replaced or fixed since it was built 7 years ago (carpets are not in great shape and walls could use a good paint… Read more »
hardy har
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hardy har

The key to understanding what’s happening in #32^ *downvoters* is what is soaring even faster than soaring mtg rates, and plummeting even faster than plummeting rates.

If you said inflation, you win the fluffy unicorn.

I say we down vote reality itself!

frank
Guest
frank

The Chinese are back buying on the North Shore. they had disappeared for a while but are back from what I can see. The ‘offshore’ Realtors. About 50% of west van sales and 10% of North Van.

hardy har
Guest
hardy har

@25,26 I jotted down some periods that may dispel some common rate beliefs

‘65-’69 — 5yr mortgage rates soared from 7-10.5% , prices soared
‘72-’75 — rates soared from 8.5-12%, home prices soared
‘78-’81 — soared from 9-18%, home price soared
‘81-’84 — 5yr mtg rates plummet, home prices plummet
‘08 — rates plummet, home prices plummet
‘09-’11 — rates rise, home prices rise
‘11-’12 — rates fall, home prices fall

Takeaway — the link between bond (mtg) rates and prices does not always work the way everyone believes.

Son of Ponzi
Guest
Son of Ponzi

Felt trapped while driving for hours in bogged down traffic.

That’s what a friend who recently moved from Kamloops to Vancouver told me.

billy
Guest
billy

Strong sales. 18k hanging by thread. Did you guys see oil today $108 awsome for petro power like canada

franko
Member
franko

The Next Detroit?

Put me down for:
Cleveland
Cincinnati
Buffalo
New Orleans

It’s much easier in North America to walk away and find greener pastures than in other parts of the world. Who knows what will happen to the mega-cities in China in 20 years.

Spent a couple of weeks in Beijing and Shanghai 2 years ago…people squeezed in like insects gasping for air. Smog in B is unbelievable. Felt trapped while driving for hours in bogged down traffic. Easy to loose sense of direction with visibility reduced to a few blocks. Can look straight at the sun at 3pm with bare eyes. It’s hard to see the top of those 100+ storey buildings in S without a good sea breeze. Had a sore throat for a month.

Son of Ponzi
Guest
Son of Ponzi

Houses in Detroit for 10 bucks.
I buy ten, my sister buy ten.v

paulb
Member

New Listings 180
Price Changes 113
Sold Listings 140
TI:18019

http://www.paulboenisch.com

s11
Guest
s11

@Jack,

I would like that to be true, but haven’t bond rates gone down short term since Ben Bernanke said no changes.

I know within the next few years interest rates will go up, but for the time being it doesn’t look there will be much change to the rates.

Regardless I think people are overspent and the market will go down before the rates go up, just my opinion.

Jack
Guest
Jack

George: “Ben Bernanke just basically said that he’s going to keep up with QE. Nothing is really changing. The world economy is one big debt ponzi scheme and there are no signs that it is coming to an end anytime soon. Although I am a bear, I think that is the best argument for the bulls.”

Except the fact real estate is supported by consumer debt which is limited. It does not matter how much money they print people can only service so much debt. The only way consumers in Canada can go in more debt is to lower rates. That jig is up and rates are heading the up now. At least the bond rates are which are what mortgages are correlated with.

billy
Guest
billy

@23

have you been to Detroitshima recently?

Melba
Guest
Melba

‘Is it clear now for bears why houses in Detroit go for 10 bucks?’

Totally!

What’s not clear is why similar houses in Vancouver go for $10M

Melba
Guest
Melba

‘BREAKING NEWS (detroit filed for bankruptcy)’

If they only had mountains, ocean, rain, traffic congestion, bike paths through exclusive residential areas, extensive drug dependencies, oddball soft drinks, the Olympics, large rat population, HAM, yellow helicopters, skiing, overpriced tear-downs, gangs, Victorian liquor laws, riots, crappy transit, rain (I know, I said it twice – sue me), crappy hockey teams, AA baseball, more bridges, RE agents moonlighting as actors, and a few other things, then Detroit would be: The Best Place in Michigan ™.

Devore
Member
Devore

The problem with “world awash in printed money” is that it isn’t. Extremely few people in the world are in a position to get 0% interest loans from the government or able to trade in toxic assets for face value to the central bank. Actually, the number is roughly zero. Only (some) corporations are allowed to do this. So even though the monetary base might be exploding, almost no one has actually received this free money. Much of it is ending up filling in holes in government budgets left by the absence of growth, so it is being misallocated on a gross scale, but that’s about it. Otherwise, please inform me how I may obtain my suitcase of money to buy a trophy house on Bike Lane Road. Where is this money being handed out?

Harvey
Guest
Harvey

Is it clear now for bears why houses in Detroit go for 10 bucks?