FFFA! Zoocasa, Flat, Up, Down, Dutch!

It’s that time of the week again…

FRIDAY!

And this is when we do our regular end of the week news round up and open topic discussion thread for the weekend, let’s get to it!

Here are a few recent links to kick off the chat:

Condo gains since 2008?
Real estate market set for slowdown?
Business escapes to USA
Carney says no Dutch disease
Realtor opinion on Zoocasa?
How are their estimates?
VCI cliche hunt
August 2012 stats

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

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VMD

With home boom winding down, is housing market on death watch?

Benjamin Tal, CIBC’s housing expert and deputy chief economist, wouldn’t go as far as Madani in predicting a price correction of as much as 25 per cent, but he agrees the time has come for caution.

“If I was a speculator, I would not be buying,” he says. “The days of flipping houses and speculating on increasing prices are clearly coming to a close. We are in the ninth inning of this boom.”

“The ride must end, agrees Tal, the only issue being is will it crash or simply coast.”

Smugglers Cove

“It’s astonishing to me that people are not picking up on this. If you see volumes crash and prices still rising, you shouldn’t be thinking everything is fine, you should see that as a warning sign,” he says.”

But we aren’t seeing volumes crash.

Vote down at will.

barb rennie

You can rent a luxury house in Vancouver for far, far less than in any of those cities.

That tells you a couple of things. Can you figure them out?

__________________________________

Tells me that Vancouver is the new India and Philippines?

patriotz

” the cost of $2 million dollars for 4000 sq ft home in Canada is cheap compared to luxury living in Asia (Hong Kong, Beijing, Shanghai) ”

You can rent a luxury house in Vancouver for far, far less than in any of those cities.

That tells you a couple of things. Can you figure them out?

Barb Rennie

When I was a kid (in the stone ages) I remember going to the local grocery store, and some random worker earning minimum wage would tell me that they would go back to their country once a year, where they would live like a king, because the wages they earn here in Canada was so much higher than the cost of living back home. I’m thinking they were referring to India. The cost of living was so low that they could send home a couple of hundred bucks a month to support a whole family, like nannies and support workers here in Canada send money home to the Philippines. Yet people come to Vancouver from China and speak the same of the price of real estate. I hear that they think the cost of $2 million dollars for 4000 sq… Read more »

Skook

@Aggregator

I appreciate your insight on the HPI. Getting an idea of its pitfalls as I work on a SC post is a great help.

Aggregator

@Devore @T @Skook The first question you have to ask before extrapolating anything from a HPI is what you’re trying to measure. It has some usefulness for long-term prices and comparing cities, but tells you nothing about liquidity. HPIs lag, big time. Look what happened in late 2010 when Van’s average price started rising while HPI was declining. http://i.cubeupload.com/vuClNd.png Now Van’s average price will head down while HPI goes up. What does that tell you? No matter what, average prices (dollar volume/sales) always leads a HPI because it’s derived from actual transactions and not formulated to act like a moving average. What’s flawed about it is that it’s meant to take out volatility so the average Joe and Jane who think in linear terms can understand it. Would you trade stocks based on a 200 day moving average? How much… Read more »

UBC in Crisis Mode

A very stressful call for help (from a message board in US):

“Last year, my mother bought a LEASEHOLD condo in Vancouver the price is $160,000, after buying the condo, as inexperienced landlords we can not find a renter. I do not know what to do, there are 400 monthly management fee, renovation cost this year is $2000, and now the windows are blocked due to the renovation (ordered by the strata?), so it is even harder to rent it out. The condo was bought using my the CREDIT LINE, …”

I said “sell it now and take a loss”.

Skook

Vancouver Island & Victoria Real Estate Boards July sales stats are now up in the VanPeak forum:

http://vancouverpeak.com/Forum-Vancouver-Island-Data

vangrl

http://www.huffingtonpost.ca/2013/08/11/canada-housing-boom_n_3739063.html

“”homebuilders are having a Wile E. Coyote moment” as when the perpetually ill-starred cartoon character realizes he has overshot the cliff and looks down to see nothing but air under his feet.

“It’s astonishing to me that people are not picking up on this. If you see volumes crash and prices still rising, you shouldn’t be thinking everything is fine, you should see that as a warning sign,” he says.”

AnonNoMore

Regarding the HPI, I thought this was a useful historical benchmark until the Fucked it up by completely changing it. It’s no longer a consistent measure for comparing historical prices.

Naked Official #9000

@frank whatever helps you sleep at night, cadre

frank

17,000 square foot! Now there a sustainable space to live in. And for once we cannot blame the Chinese, this is some local bloated money-bags. Are there no building codes on Bowen that would prevent such a monstrosity being built?

one migrant economy

from the resilience link: “my friend Chris Corrigan has written, is hopelessly fixated on the only ‘growth’ business on the island — increasing property values — and the island’s elected officials, thanks to the orchestrated ousting of all the Greens in the last municipal election by a cabal of developers and deluded libertarians, are now either developers themselves or in thrall to the mantra of increasing property values at any cost. And that cost includes an upsurge in the horrific destruction of the island’s wildlands and shores for monster mansions, massive driveways and docks for private yachts http://bowenbulletin.artisanoffice.com/2013/08/01/paddling-to-crc/ “Standing on my paddleboard on a beautiful summer Sunday I head out from Tunstall Bay, into a small headwind and down to Cape Roger Curtis. I like that I practice a water sport that requires me to take a stand. It’s a… Read more »

one migrant economy

http://www.resilience.org/stories/2013-08-09/enough-to-go-around-the-case-for-community-currency very interesting article on currency reform on Bowen island “There are many unused and underused buildings, areas of cleared land, and empty rooms, while rents here (and in neighbouring Vancouver) are so expensive that many are essentially homeless or living in intolerably squalid places. Many of the people on Bowen are comfortably retired or (uncomfortably) unemployed, employed only part-time or underemployed, yet many goods and services that these people might be producing, and which Islanders need, are not available on the island at all. And on the mainland, in addition to the cost of transportation to and from the city, these needed goods and services are often unaffordable, so ‘middle-class’ and poorer Islanders (including many in the so-called ‘creative class’ — artists and crafters and musicians and designers) do without them. And much of our commercial space is only… Read more »

bunnyrancho

June 12, 2013
http://www.theprovince.com/life/Bunny+Ranch+brothel+boss+ready+shop+Supreme+Court+strikes+down/8511176/story.html

August 8, 2013
http://www.cbc.ca/news/canada/british-columbia/story/2013/08/08/bc-vancouver-prostitution.html

there could be news soon that strikes down the prostitution laws. They Mainstream press is hardening us up. The bunny ranch story just can’t shutup about the woman prostitute getting out of her student loan predicament. That can be transposed to a whole number of financial problems, not least the home based business ‘mortgage helper’

Skook

@T @Devore This is exactly the responses I am looking for – why the HPI is disliked or liked whatever the case may be and why. Devore, you say the exact methodology is secret, yet the REBGV has a guide available to download… http://www.rebgv.org/sites/default/files/HPI%20Methodology%20Update_Sept2012_EN.pdf I have looked at this and don’t understand it, but I am not a statistician. Bear with me here, I am just trying to wrap my brain around this. RE Boards say the HPI was developed as a comparable tool to the Consumer Price Index and I am going to assume most of us don’t understands its methodology and yet we accept it as a useful tool to indicate the monthly rise or fall in the cost of goods. So, when it goes up, I can assume things are going to be more expensive when I… Read more »

Devore

I don’t get the impression that “they’re trying to hide something” (ie, a conspiracy), just that the index is a black box (the exact methodology is secret)and what is known of it seems to be by design skewed upwards (for example, a “benchmark property” would be chock full of laminate, “stainless”, granite and walk-in closets, and not a ubiquitous 50 year old bung).

Regardless, despite its flaws, average, median, and other indexes have flaws and biases of their own, so the HPI has uses, but there is just no such thing as a definitive index in real estate that you can simply apply everywhere. This is why we look at several price indexes and other metrics to judge the state and direction of the market.

T

HPI cons:
1. Secret formula used to calculate. There isn’t much transparency.
2. Prior months have been revised on multiple occasions. This brings about concerns of consistency and honesty.
3. Apples and Oranges. Introduction of the HPI causes apples to oranges comparisons with historical data.

Skook

Really?

You’re voting down questions? Why?

Skook

I am working on a Sunshine Coast post and I have a question: why is the Home Price Index data slammed by so many? The general impression I get is that many feel Boards who use this methodology are trying to hide something. What are the reasons behind this view? What about the Benchmark Price which part and parcel of the HPI? Is this to be dismissed, too? Do either one have any value at all when interpreting sales data?

Look forward to hearing what you have to say about both.