FFFA! Renting, Towers, Market, Bubble, Depreciation

Well looky here!

You made it to the end of another work week!

And that means on this particular website that it’s Free-for-all time!

This is our regular end of the week news round up and open topic discussion thread for the weekend, here are a few recent links to kick off the chat:

Can the media predict a bubble?
EI numbers up 10% in BC
Is ‘Depreciation’ a dirty word?
Signs of overbuilding?
Toronto prices to double in 25 years
Get drunk with the kids
Put your face on a bus stop
The cheese loophole
Not pasta sauce, the Eiffel Tower
Is US housing set for another crash?

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

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ILoveCharts
Guest
ILoveCharts
Xhdh
Guest
Xhdh

@1: haha, it’s like a time machine, only 30 years ago you’d replace the word ‘china’ with the word ‘japan’.

RealityCheck
Guest
RealityCheck

Have a good holiday weekend everyone.

We will battle after the 25th.

RealityCheck
Guest
RealityCheck

ILoveCharts:

To that link to the story you provided I say WOW!

If anyone still denies HAM after reading that then….

tedeastside
Member
tedeastside

in Vancouver hope the rich kids like the cold rain and general lack of anything to do,

while some poorer kids are stuck at Orange County beaches or hanging out at Times Square

Many Franks
Member
Active Member

Will Dunning’s out with some bearish predictions:

Vancouver’s real estate market faces a rough ride in the coming years, says a new report from Royal LePage.

The report foresees a dark period for Vancouver housing due to factors such as low job creation, rising interest rates and changes to federal mortgage policy.

“The Vancouver housing market is clearly in a state of transition, from an environment of very rapid growth of house prices to a period in which price growth will provide much less impetus to housing demand … and to job creation,” the report by market economist Will Dunning said.

In other words, the rowboat is about to hit a big patch of steam in the Vancouver saucepot.

Loon
Guest
Loon

@Ilovecharts

LOLd my pants, what are they teaching the kids back home ?:

“Most schools are recruiting [Chinese] students for whom the difference between a $20,000 and a $40,000 education is a rounding error,” Krommenhoek says.

Newcomer
Member
Newcomer
Everyone has been asking for a chance to short Canadian housing. Well, here it is folks! “Investors in Canada are to get the chance to bet against their own real estate market as one of the first short-focused funds is set to launch in the country, where concerns have grown that there is a housing bubble ready to burst.” ““The thesis behind the fund is that the Canadian housing market is one of the most overvalued in the world,” said Mr Brown. “A lot of things people observed in the US in the run-up to 2007-8 crisis are happening here.” The OECD has ranked Canada as one of the countries most at risk of a price correction, especially if borrowing costs increase or income growth slows. Deutsche Bank recently said Canada is the most overvalued market in the world, with… Read more »
Son of Ponzi
Guest
Son of Ponzi

# 8
the simplest form to short Canadian housing, particularly in Vancouvsr, is to rent.

patriotz
Member

@9:

Renting is not a short position. If you rent in a building owned by a REIT are you short the REIT?

@8:

“Investors in Canada are to get the chance to bet against their own real estate market”

Which is not the same as selling short. In a short sale you are making a bet against the buyer of the actual asset.

This fund provides the opportunity for RE bears to bet against RE bulls. But you need both sides of the bet. If no bulls are willing to take a position there will be no positions available to the bears.

Son of Ponzi
Guest
Son of Ponzi

I’m renting until house prices have fallen to a point were I’ll buy again.

Joe Mainlander
Guest
Joe Mainlander

Now you can invest in the coming housing slump. If you’re a wealthy investor.

“The hard-landing hedge fund: A new way to bet against housing”, Globe & Mail

http://www.theglobeandmail.com/report-on-business/the-hard-landing-hedge-fund-a-new-way-to-bet-against-housing/article16063936/

“A Toronto financial firm is creating a hedge fund that will allow Canadian investors to bet on a housing slump, a move that underscores the skepticism that exists about policy makers’ ability to engineer a soft landing for the real estate market.”

““I think it’s a tough slog going forward,” said Michael Brown, the portfolio manager of the new fund at Spartan… “It may not be a fall of 50 per cent, but it’s got to be a fall of 30 per cent,” he says.”

Softy
Guest
Softy

Ok, so all you bears should take the proftis you have made in stocks and saved by not owning and plow it into this product. Put your money where your mouth is and bet against housing.

How confident are you that there will not be a soft landing?

Joe Mainlander
Guest
Joe Mainlander

‘Cause it’s a hedge fund, and they are limited to very wealthy investors, not common folk like us.

Joe Mainlander
Guest
Joe Mainlander
More bubble talk; CBC, “Why a housing bubble is good (but maybe bad for you)” http://www.cbc.ca/news/business/why-a-housing-bubble-is-good-but-maybe-bad-for-you-1.2470614 “We’ve had another year of foreboding on global property prices from very respectable sources. New homes in big Chinese cities are up another 20 per cent despite attempts by the government to cool the market. In London, prices are rising at six times the rate of inflation. Even Mark Carney, the Canadian-born head of the Bank of England, can’t keep a lid on it. Canada comes in for special treatment. The latest of the doomsayers, Deutsche Bank, said in a Scrooge-like pre-Christmas superlative that Canadian property was the most overvalued on the planet — some 60 per cent above what it should be. Just in November it was the Organization for Economic Co-operation and Development — the rich countries think tank — that singled… Read more »
i have become vaguely numb
Guest
i have become vaguely numb

http://www.investing.com/analysis/2013:-10-shocking-charts-196557

There are only seven oilfields in the world that produce one million barrels per day (bpd) or more of oil. Three of them are now in the United States – the Permian Basin, the Eagle Ford and the Bakken.

http://english.pravda.ru/business/finance/17-12-2013/126406-oil_market_collapse-0/

The expectations of some Russians and foreign experts are similar, but their goals are different. “People heard something vague about the so-called “Dutch disease…”

Brian Ripley
Guest
Brian Ripley

Real Estate is a good investment if it produces an acceptable yield. That’s the rub eh? (for instance property taxes in Vancouver are going up 1.9% in 2014)

Bloomberg has a graphic out that shows Blackstone’s model and I notice if I have done the math correctly that their income statement allows for 58% of gross income to allocate to the expense side before debt service and that includes a 10% vacancy rate: http://www.chpc.biz/2/post/2013/12/buy-low-sell-high.html

My May 2013 Vancouver Condo Study in its most conservative scenario allocated only 39% of gross income before debt service:
http://www.chpc.biz/2/post/2013/05/vancouver-condo-yield-case-study.html

I wonder what real Vancouver Rental Property income statements look like.

patriotz
Member

@12: “Mr. Brown declined to discuss specific trades, but the fund will short stocks or other securities in a bet that their values will fall. He said he’s looking at financial companies, insurers, real estate and consumer firms.”

So the fund is actually going to short stocks whose performance they think is tied to RE.

UBC in crisis mode
Guest
UBC in crisis mode

From MoneyGeek.com

Housing Market Update
If you’re like most young professionals, you either own, or dream of owning a home one day. On every half month update, we’ll provide you with news and commentary that relates to the housing market.

Below are November’s changes in the Teranet House Price Index (reproduced with permission). The index gauges the state of the housing market.

(Region): (Change since last month), (Change since last year)

National Average: -0.1%, +3.4%
Calgary: -0.3%, +5.9%
Edmonton: -0.2%, +3.0%
Halifax: +0.6%, +0.8%
Hamilton: +0.3%, +5.2%
Montreal: -0.6%, +0.8%
Ottawa: -0.2%, +1.2%
Quebec: -0.2%, +3.7%
Toronto: -0.2%, +4.2%
Vancouver: +0.6%, +3.9%
Victoria: -1.8%, -1.4%
Winnipeg: +0.1%, +2.8%

The Teranet numbers are much more relevant than some of the metrics the media likes to use. Various media outlets often report the change in average housing prices, which are not very useful, for reasons outlined in this blog post.
http://www.moneygeek.ca/weblog/2013/08/12/pitfalls-using-housing-price-indices/?utm_source=MoneyGeek+Newsletter&utm_campaign=b569ac49b1-MoneyGeek_Jul_2013_Half_Month_Update7_22_2013&utm_medium=email&utm_term=0_19555f4f2d-b569ac49b1-68008225

JoJo
Guest
JoJo

The Vancouver Peak post about the new building on Bidwell needing to stoop to rentals has incorrect info. Rentals were always part of the plan, which was as a “mixed-use development
containing rental and condominium housing and at-grade commercial uses”.

http://former.vancouver.ca/ctyclerk/cclerk/20091103/documents/p3.pdf

Skook
Member
Skook

Hey JoJo, Re: #20

Why not head to VanPeak and post that info as a ‘Reply’ in the thread. VanPeak is a forum and its wide-open for yours and everyone’s comments regarding anything you read there.

Jenna
Guest
Jenna

Can’t wait for RE to crash. The municipal governments are making a killing with siatung property values. Wait until prices go down. Mayors are going to be crying.

paulb
Member

New Listings 68
Price Changes 23
Sold Listings 88
TI:13297

http://www.paulboenisch.com

Snake
Guest
Snake
Newcomer
Member
Newcomer

@ Jenna 22

Actually, assessed property values only influence what share of the total property taxes a given property will pay. If your house is worth two million and my house is worth one million. Then you pay, say, two thousand bucks and I pay one thousand. If there is a crash and your house is now worth one million, while mine is worth only half a million, you will still pay two thousand and I will still pay one thousand.