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?

Sort by:   newest | oldest | most voted
I_see_debt_PEOPLE!
Guest
I_see_debt_PEOPLE!
2 years 3 months ago

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
2 years 3 months ago

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
2 years 3 months ago
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… Read more »
manx
Member
manx
2 years 3 months ago

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
2 years 3 months ago

@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
2 years 3 months ago

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
2 years 3 months ago

…..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
2 years 3 months ago

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
2 years 3 months ago

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

http://youtu.be/aaEqZQXmx5M

space889
Member
space889
2 years 3 months ago
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… Read more »
Zero Down Forty
Guest
Zero Down Forty
2 years 3 months ago

@#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
2 years 3 months ago

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
2 years 3 months ago

…..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
2 years 3 months ago

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

paulb
Member
2 years 3 months ago

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

http://www.paulboenisch.com

Johnny-boy
Guest
Johnny-boy
2 years 3 months ago
Son of Ponzi
Guest
Son of Ponzi
2 years 3 months ago

Expired/cancelled listings 41.

Real World
Guest
Real World
2 years 3 months ago
@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… Read more »
Son of Ponzi
Guest
Son of Ponzi
2 years 3 months ago

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
2 years 3 months ago

@Real World #18

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

tedeastside
Member
tedeastside
2 years 3 months ago

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
2 years 3 months ago

@#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
2 years 3 months ago

@#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
2 years 3 months ago

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
2 years 3 months ago

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

patriotz
Member
2 years 3 months ago
@18: “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.” Being outbid by someone else for labour or some other factor of production does not mean a shortage. What it means is that someone else is more efficient at using that factor of production than you. If someone is willing to pay more than you can for workers and make a profit, that’s the market telling you that your business is not viable. Don’t expect the government to… Read more »
Many Franks
Member
2 years 3 months ago
The unstoppable force (strata council dysfunction) meets the immovable object (depreciation report requirement): Condo owners ignoring depreciation reports Fewer than 20% of the 30,000 strata corporations in British Columbia have agreed to acquire depreciation reports, which were mandated for most condominium buildings in December 2013 under the provincial Strata Property Act, Regulations and Amendments. … “Anecdotal evidence is 50% did nothing, by way of not voting, 15%-20% ordered the report and the balance voted to exempt themselves,” said Jeremy Bramwell, president of Vancouver-based Bramwell & Associates Realty Advisors Inc., a commercial appraiser that operates one of the largest depreciation report… Read more »
#thisisadisaster
Guest
#thisisadisaster
2 years 3 months ago

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

Can you please explain why? What is the benchmark we should be looking for? Is there a seasonal trend? Please explain what we need to be looking out for.

Thanks!

space889
Member
space889
2 years 3 months ago

I think East Van only has 1 really good ranked highschool, with lots of high schools from Burnaby, Richmond, North Van outranking that one. The prices in those places aren’t higher than East Van and you get better house and neighborhood in my view. For families with young kids and worried about quality of education at public schools, I don’t see why you would pick East Van.

Also, I just like houses that are a bit further apart from each other myself.

dyugle
Guest
dyugle
2 years 3 months ago

https://www.cmhc-schl.gc.ca/en/corp/about/anrecopl/anre/upload/CMHC_68134_w.pdf
Looks like the CMHC can get around the 600 billion limit on insurance-in-force. They plan to increase the guarantees-in-force category by over 45 billion this year. So much for the government trying to decrease taxpayer risk. This will bump up the total to over 1 trillion dollars in taxpayer backed loans.

cris
Guest
cris
2 years 3 months ago

space 889,

Churchill is still a very good school.

UBC in crisis mode
Guest
UBC in crisis mode
2 years 3 months ago
Some recent price reductions (5% or more) for Vancouver properties between $1.5 – 2 million. You need to move fast before priced out forever. $1,988,000 5850 GRANVILLE ST, Vancouver, BC V6M 3C7 Possible future development assembly. ARKS City plan suggests Senior’s Housing. Call LS for details. Character house is priced at resid… House – 2,644 Sqft. – 5 Beds – 2.0 Baths $200,000 (9.1%) Jan. 22, 2014 ============================ $1,980,000 858 W 63RD AV, Vancouver, BC V6P 2H4 Marpole area, build-to-suit 3 level home with 3bdrm up and mortgage helper in bsmt. Build your dream home with your choice of color… Read more »
fixie guy
Guest
fixie guy
2 years 3 months ago

30 dyugle: “Looks like the CMHC can get around the 600 billion limit on insurance-in-force… plan to increase the guarantees-in-force category by over 45 billion this year.”

The federal election isn’t until 2015.

Egg Hunt
Guest
Egg Hunt
2 years 3 months ago

Many banks, Invetsment analyst predict further Canadian dollar depreciation.
Now Canada’s economy heavy on debt, very low on export,
government does not target FX rate, but with its current policy,
currency devaluation only supports internal inflation.

— quote —-
There is no means of avoiding the final collapse of a boom brought about by credit expansion. The alternative is only whether the crisis should come sooner as a result of a voluntary abandonment of further credit expansion, or later as a final and total catastrophe of the currency system involved.”
Ludwig Von Mises

Son of Ponzi
Guest
Son of Ponzi
2 years 3 months ago

# 34

— quote —-
There is no means of avoiding the final collapse of a boom brought about by credit expansion. The alternative is only whether the crisis should come sooner as a result of a voluntary abandonment of further credit expansion, or later as a final and total catastrophe of the currency system involved.”
Ludwig Von Mises
——————-
That’s what my mechanic tells me:
Pay me now, or pay me later.

VMD
Member
2 years 3 months ago

Vancouver sees the country’s biggest drop in new home prices
The price of new homes dipped in the twelve months to March, according to the New Housing Price index released by Statistics Canada May 8.

Year-over-year, prices were 1.1% lower than a year ago. This represents the biggest drop in the country compared with all other major cities. Ottawa-Gatineau came in second place with a decrease of 1.0%.

StatsCan table here

would-be buyer
Guest
would-be buyer
2 years 3 months ago
Son of Ponzi
Guest
Son of Ponzi
2 years 3 months ago

#28
These numbers are from Paul B’s report. Price changes.
Almost all price changes are price reductions.
Daily price reductions over 120 appear to be quite high, though I have no historical data. (too lazy to go back and check all of Paul’s postings).
With an average of 120 over 22 business days we could see about 2,500 price reductions per month.
Which is quite significant, I believe.

wcth
Guest
wcth
2 years 3 months ago

#36

I just took a look at the StatsCan data.

According to their index for new homes the current prices in Vancouver are at 2007 levels!!!

There were peaks in 2007 and 2010 but prices have been on a decline since 2010.

Good thing this no one knows about this index.

Joe Mainlander
Guest
Joe Mainlander
2 years 3 months ago

@#39 Even looking at REBGV HPI;

peak of 2008 June = $569k (adjusted for inflation should be $630 in today’s dollars)
2014 April = $619k

So even their HPI shows a drop in real dollars. HPI has not even kept up with inflation.

The correction has been slowly happening. It’s all in the way they spin it.

Son of Ponzi
Guest
Son of Ponzi
2 years 3 months ago

#40
and on top of it:
REAL inflation has been higher than reported by the Government.

#thisisadisaster
Guest
#thisisadisaster
2 years 3 months ago

“Daily price reductions over 120 appear to be quite high, though I have no historical data…
With an average of 120 over 22 business days we could see about 2,500 price reductions per month.
Which is quite significant, I believe.”

Sharp analysis. I’m convinced.

mac
Member
mac
2 years 3 months ago

Price reductions we’re seeing mean nothing. We’ve had times before when price reductions on any given day were higher than sales. That is something. Most people want too much for their house. That’s what this measures. Stubborn idiots with high asking prices.

George
Guest
George
2 years 3 months ago

@cris #31

Churchill is on the west side of Vancouver, not the east side. I know there are some west side snobs who think anything east of Granville Street is the east side.

George
Guest
George
2 years 3 months ago
I made some posts on the last thread about TFWs and how the NDP seem to be more on the side of the TFW than out of work Canadians. Although, the subject of TFW is getting exhausting I just want to acknowledge Patriotz’ response #65 pointing out how Jinny Sims had some strong criticism of the TFW program and how it impacts working class Canadians. Yes, Patriotz, I agree. The way Jinny Sims has gone after the TFW program has been impressive. Unlike Mable Elmore and others in the NDP she seems to get that the first priority should be… Read more »
George
Guest
George
2 years 3 months ago
I also want to respond to Zero Down Forty #42 on the previous thread. It’s the second time you’ve refered to me as an immigration “truther”. What does that even mean? If you are accusing me of insisting on the truth (as opposed to propaganda, spin) when it comes to immigration, then, yes, I am guilty as charged. I insist on the truth because I care about my country and I am a politically engaged citizen. The term “truther” when used in this context as a slur seems to be an attempt to draw comparisons to the “birthers” in the… Read more »
George
Guest
George
2 years 3 months ago
The point that I was trying to make on the previous thread was that it is not a forgone conclusion that the Conservatives will lose the next federal election because of the TFW scandal, as one commenter was arguing. I accept what Patriotz is saying that the NDP have a better position on the TFW program than the Conservatives. It just seems like anti-immigrant sentiment is growing in Canada, it seems like Canadians are increasingly rejecting multiculturalism. The TFW and IIP programs are some of the hot button issues that are pushing Canadians towards more of an anti-immigrant stance. Yes,… Read more »
Best place on meth
Guest
Best place on meth
2 years 3 months ago

That’s correct, the Conservatives won’t lose the next federal election because of the TFW scandal.

They’ll lose the next election because people are sick of them.

paulb
Member
2 years 3 months ago

New Listings 256
Price Changes 95
Sold Listings 164
TI:16538

http://www.paulboenisch.com

Heard Herd selling
Guest
Heard Herd selling
2 years 3 months ago

Writing on the walls, Bank CEO all retiring coincidence at the peak? New finance minister, federal election next fall, anyonewith half a brain can see the powers at be are blowing hot air until after the election, then boom pop the balloon and 4 years for the sheeple to forget about it,

wpDiscuz