debt, economy, Open Topic, opinion, predictions, prices

High prices: sign of a sick or healthy market?

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61 Comments

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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saihywekh

The demand is high so that the price is high. It is a positive sign for the economy.

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Lou

I was trying to make an offer, but the seller’s realtor showed me an offer from one buyer’s agent, said will even go higher. Btw, the pontential buy is a ham, signed in Chinese, this is not a lux house, a 20 years duplex, wtf, I know my limit and refuse to go onto a bidding war….locals are priced out forever.

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trackback

[…] new home price drop in Canada -Average house price takes record fall -Inflation adjusted HPI lower than 2008? -New house prices lower than 2007? -Condo owners ignore depreciation reports -Cashback mortgages, […]

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Son of Ponzi

China-US Railway will have to go through Canada. I wonder if it will include a stop in Vancouver (or more likely Richmond)?
—————-
Actually, the terminus station will be Aberdeen Mall in Richmond.
Close to the Best Chinese Restaurants outside of China.
And while there, check on the empty Vacation Homes.

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Oh Grow Op!

44: “I know there are some west side snobs who think anything east of Granville Street is the east side.”

Eh. Do you know anyone other than near-hobos who live by Granville? I’d say anything east of Arbutus is the east side and anything east of Alma is suspect.

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George

China-US Railway will have to go through Canada. I wonder if it will include a stop in Vancouver (or more likely Richmond)?

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George

From The Guardian:

“China is considering plans to build a high-speed railway line to the US, the country’s official media reported on Thursday.

The proposed line would begin in north-east China and run up through Siberia, pass through a tunnel underneath the Pacific Ocean then cut through Alaska and Canada to reach the continental US, according to a report in the state-run Beijing Times newspaper.”

http://www.theguardian.com/world/2014/may/08/chinese-experts-discussions-high-speed-beijing-american-railway

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Simon

@UBC

Let me get this straight. Investors scared off by the bursting of China’s housing bubble will decide to move their money into Vancouver’s housing bubble?

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No Noise

@47 multiculturalism is actually not the problem (although I prefer the US melting pot model). It’s the growing global separation between rich and poor (see Piketty: http://en.wikipedia.org/wiki/Capital_in_the_Twenty-First_Century)

@12 to follow-up: nobody worth listening to thinks Vancouver RE is a good investment at this point. And think of all the costs of ownership that have been listed here ad nauseum. If your wife is so house-horny there are a ton of other non-Vancouver, non-Canada ways to invest in RE. Maybe she’ll be happy enough being an owner and having renters in a RE market with an actual potential upside. Or better yet, stay liquid, avoid cost of ownership, and go with a tradeable RE product – stock, bond, etc, etc

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UBC in crisis mode

Two reasons for hot money flowing into VAN RE:

1. Bursting of China’s housing bubble, e.g. RE in China is no longer a safe investment, so other cities looks more attractive, particularly Vancouver as there is no restriction/tax for foreign buyers;
2. Anti-corruption by Xi Jinping, many officials need to sell their properties before getting caught. The money needs to go somewhere.

Vancouver’s high end market should be doing great in the next few months.

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Guy Smiley

Interesting comment from that article listed by Would-be-buyer….

One shouldn’t discount the influence of Xi Jinping’s anti-corruption campaign. As a Chinese citizen, hiding unlawful money in property even in abroad is vulnerable from concealment of ownership.

I sure hope this guy is right.

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Heard Herd selling

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,

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paulb

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

http://www.paulboenisch.com

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Best place on meth

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.

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George

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, this is due to the actions of the Conservative government. But it remains unclear that a rise in anti-immigrant sentiments due to TFW and IIP are going to translate into more votes at the ballot box for the NDP and… Read more »

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George

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 US–American far right Tea Partiers who, despite being shown the evidence in the form of a US birth certificate, insist that Barack Obama was not born in the US. There is no similarity between US “birthers” and people in Canada… Read more »

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George

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 Canadian workers. I’ll probably vote for the NDP.

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George

@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.

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mac

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.

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#thisisadisaster

“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.

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Son of Ponzi

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

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Joe Mainlander

@#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.

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wcth

#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.

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Son of Ponzi

#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.

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