High prices: sign of a sick or healthy market?

When you own something you might be delighted to hear that the price is rising.

Even if you don’t sell it to cash in, there’s a certain amount of psychological comfort to be found in owning something ‘valuable’.

So it’s not remarkable that many people are delighted by the rising cost of real estate in Canada.

But is this just the economic equivalent of a sugar high?  If all homes are rising in price you don’t really benefit from selling unless you leave the market or downsize to where the percentages are smaller.

Jonathan Miller, a US real estate appraiser posted an article comparing the US and Canadian markets.

He makes the point that sharply rising prices in US markets didn’t work out to be indicative of a markets health, rather they led to the inevitable hangover when the party was over.

Is it different here?

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I_see_debt_PEOPLE!
Guest
I_see_debt_PEOPLE!

Never rising interest environment says the CB.
It’s different here people.
HAM as always.

Another 10-15 years and THEN, the prices reverse for another 25 years.

But, we’ll all be dead by then.

No Noise
Guest
No Noise

It’s a sick market definitely, but one can be sensible and go on a low-sugar diet anytime. “If all homes are rising in price you don’t really benefit from selling unless you leave the market or downsize to where the percentages are smaller”. How about leave the market (sell, at high) and buy back (locally) following the correction?

Mister Obvious
Guest
Mister Obvious
High prices mean nothing until you crystallize your gains and rebalance. If your only asset is a house then “rebalancing” simply means downsizing to a lesser piece of RE. In that case, prepare to lose a chunk of your newly freed equity to real estate commissions, legal costs and moving fees. The best way to keep most of your gains is to invest in a carefully diversified and balanced portfolio for the long term. Yes, you will still need to take some risks but they are moderate in comparison to the ones you now face now at the top end of this property bubble. Then become a renter and let some other property owner take the hit due to the present high RE risk and its associated low capitalization rate. Make sure you go for professional management in a purpose-built… Read more »
manx
Member
manx

whats going on with SFH in van east? Everyone is offering without subjects (inspection) to win bids (the hot ones at least). Is this a new low or has this been happening for years?

space889
Member
space889

@manx – simple – those houses priced between $700K to $1M are affordable to most locals who are trading up and there aren’t many of them, hence the bidding one. Everyone want to live in Vancouver and Van East is still better than everywhere on the planet except Van West and West Van.

Yes, people are that crazy so just accept it and try to profit from it.

piper
Guest
piper

http://www.hiddensecretsofmoney.com/blog/OutrageousCanadianCurrencyExpansion

OUTRAGEOUS – Canadian Currency Expansion Dwarfs USA
By Dan Rubock – HiddenSecretsOfMoney.com
Posted May 04, 2014

“The expansion of your currency supply in the last decade is outageous…this is actually theft”
​- Mike Maloney

Michael Maloney will be appearing at the Canadian Investor Conference June 1-2 in Vancouver.

Melba
Guest
Melba

…..Everyone want to live in Vancouver and Van East is still better than everywhere on the planet except Van West and West Van…..

This statement perfectly illustrates what’s at the core of Vancouver’s RE prices, i.e. Vancouverits are nuts (I think they must roll down the mountain sides and land in Vancouver).

I wonder if there’s some sort of universal dementia scale that measures the thickness of people who think Vancouver is the best place on the planet?

manx
Member
manx

I’m one of those demented people that wants to live in east van. i grew up there, my aging parents are close by, its close to work. i don’t think vancouver is the best place on earth, far from. I’ve accepted that prices are going to be crazy but I cannot accept the fact that offers with subjects are tossed out immediately. Whats next? Every offer must come with a $1000 cash in an envelope?

Yunak
Guest
Yunak

Off the topic but efficient in addressing cultural differences when it comes to emigration.

http://youtu.be/aaEqZQXmx5M

space889
Member
space889

When there are 10 competing offers and seller wants a quick close, why would you consider any offer that has subjects, even if the price is say 5% higher? An accept offer with no subjects means even if the deal fell through, the buyer is still on the hook for any losses the seller suffers. If the seller manages to sell for a higher price after a failed first deal, the seller still gets to keep the ~5% or 7% deposit so it’s even a bigger win.

Quick sell with no subjects is the way to go in the current market. Especially given that a lot of the East Van older houses likely have lots of internal problems being covered up by fresh paints. No inspection subject is a god send.

Zero Down Forty
Guest
Zero Down Forty

@#38 Then rent in East Van. It will be cheaper and your landlord will be subsidizing you, while you continue to build up a down payment in a market that has been flat for 5 years.

For every $10k you save toward your downpayment, you will save about $6k of interest on a 25 year mortgage.

manx
Member
manx

We’ve been renting in east van for 4 years and have 50% down (saved over many many years) for our target crack shack. Landlord is selling our apartment soon and wife is spooked from renting. Plus we now have a young child. Where do I insert unhappy wife and growing kid in the rent vs buy equation?

sugarhigh
Guest
sugarhigh

…..Everyone want to live in Vancouver and Van East is still better than everywhere on the planet except Van West and West Van…..

Hahahahahah. Hahahhahahahaha. Hhhaaaaagghhhhhhh. Acch. Sorry choked on my pizza. Hahah. Oh boy, that’s a doozy.

CanuckDownUnder
Member
CanuckDownUnder

@12: Your wife is spooked? That’s what you get for renting next to a hospice.

paulb
Member

New Listings 290
Price Changes 136
Sold Listings 177
TI:16515

http://www.paulboenisch.com

Johnny-boy
Guest
Johnny-boy
Son of Ponzi
Guest
Son of Ponzi

Expired/cancelled listings 41.

Real World
Guest
Real World
@92 “As I’ve said before, there can’t be a shortage of anything in a free market because supply and demand are always equal at the market price.” I guess you learned everything from a text book. In the real world there is a finite supply of quality labour. If one company raises wages to attract a more desirable candidate another company loses out and has a shortage. I have no direct experience with TFWs but I can see why companies are going that route. When it comes to unskilled labour Canadians just don’t want to do it. You can pay $20 per hour starting with zero related experience and zero skill level and you still end up with lazy people who show up when they want. The TFW program is not about saving money it is about getting a reliable… Read more »
Son of Ponzi
Guest
Son of Ponzi

Price reductions for the last 3 days:
127,120,136
Let’s keep an eye on this number.
It measures sellers delusional thinking.

Guy Smiley
Member
Guy Smiley

@Real World #18

Hahahaha thumbs up…. That is a kick-ass closing argument!

tedeastside
Member
tedeastside

Seattle… the birthplace of Costco, Starbucks, Amazon, Boeing, Microsoft,
the richest human being in the history of mankind,

Vancouver… the birthplace of BC Bud

man… Seattle is such a winner, vancouver is such a loser, it has to call itself the best place on earth

The Man
Guest
The Man

@#12 You can’t. There is no known power in the universe that is stronger than the biological force of a nesting woman. CMHC, interest rates, HAM, speculators…. Hah. You all think that is driving our market? Tens of thousands of wives and girlfriends are driving this market.

No Noise
Guest
No Noise

@#12 You can. Rent a bigger place in East Van for your family. Like we do. Vancouver has incredible price-to-rent valuations. Then you can diversify your liquid assets too! haha

RaggedyRenter
Member
RaggedyRenter

News from South East Asia.

Apparently palm oil importers in China imports palm oil to obtain financing to play in the real estate game. Apparently this all went fubar

http://in.reuters.com/article/2014/05/08/china-palmoil-idINL3N0NU07120140508

Helluva business plan

Start a business
Borrow money for the business
Import a commodity
Borrow against the commodity
Leverage up in the real estate market
Run to West Van when all goes down.

chosun
Guest
chosun

@the man, you don’t see many kids in the City of Vancouver
the suburbs have all the kids

wpDiscuz