Party like it’s 1981

Remember the 80’s?

Big hair, jelly bracelets and 20% interest rates.

Homebuyers back then had a tough time, they had to save up for a big down payment and the cost of holding a mortgage was high.  All that hard work and sacrifice was well rewarded though as Rob Carrick points out in the Globe and Mail:

The high interest rates of the early 1980s must have felt unbearable for all Canadians buying homes and arranging mortgages (it was heaven for savers, but never mind). The reward for perseverance was a 30-year run in which resale house prices on a national basis surged by an average annual 5 per cent and were up in 28 of 34 years.

This rally was fed by falling interest rates. After the visit to high-rate hell in the early 1980s, home owners benefited from a long decline in rates that continued into 2015. House prices haven’t gone up because homes are a great investment, because of immigration, because of foreign money or because home ownership is awesome. It’s because we’ve had a 30-year sale on the cost of financing a home purchase, with ever-increasing deep discounts.

That sale may be ending. There’s a growing sense that the U.S. economy is on the upswing, and interest rates in the bond market have already started to creep higher. Mortgage rates take their cue from rates in the bond market, so we could see lenders increase fixed-rate mortgage costs at some point this year or next.

For the historical perspective read the full article here.

The thing that may surprise you is that despite a housing market that has provided magical returns for older buyers and cheaper and cheaper debt seniors are still going bankrupt in record numbers.

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Shut It Down Already
Guest
Shut It Down Already

“Name one Bear on this blog that has not admitted they’ve been wrong?”

tedeastside?

Billy Bob
Guest
Billy Bob

The bear blogs would be much more valuable if they focused on why the bear viewpoint has been so wrong for so long. Are those factors still in play? Are they likely to continue to support the prices? Repeating year after year a crash/downturn is just around the corner seems as bad as the market pumpers.

Billy Bob
Guest
Billy Bob

would-be buyer – I could have written verbatim what you just did! I wish I never came across these bear blogs and just blindly followed the masses. Remember Vancouver Housing Blog?

best place on earth
Guest
best place on earth

and doesn’t mean it will either!

Best place on meth
Member
Best place on meth

@84

“#81 she realized her profit briefly but jumped right back in the game and in a bigger way.

Like selling 1000 shares of Fortis and buying 2000 shares of Canadian Utility.”

I see it more like taking your winnings from the Blackjack table, walking across the aisle and plunking it all down at the roulette table.

Actually realizing a profit would have meant walking out the door and going home which that fucking idiot shutitdown just can’t seem to comprehend because it’s too complicated for him.

DaMann
Member
DaMann

@88

As the old saying goes
“Just because I’m not dead yet doesn’t mean I’m immortal”

Just because it hasn’t crashed yet doesn’t mean it won’t.

Single family homes were never going to be my thing. I live in the westside and will probably always will. Even at a 50% discount I couldn’t afford a house. I have kept my eyes on townhouses and houses carved up into 3 units. Condo prices have not really moved in at least 5 years. I’ll wait it out…

And yes, this has gone on a lot longer than I ever thought it will. But i still think a crash is coming, actually even more so now. It all hinges on rates.

best place on earth
Guest
best place on earth

well, at least, your own admission took you off the list.

vangrl
Member
vangrl

#88

Name one Bear on this blog that has not admitted they’ve been wrong?

We’re fully aware. I’m tired of bulls stating otherwise.

Except Garth, fake Garth and real Garth.

best place on earth
Guest
best place on earth
“I have come to the conclusion that either 1. we are special and it is truly different in Vancouver or, conversely, 2. we are seeing one of the most spectacular RE bubbles in the world and it won’t end well. I really hope it is the latter. I have been betting that it’s the latter for the last 6+ years. I am the laughing stock to friends and family who have seen their RE values increase steadily over the last 6 years while I keep crying wolf. My colleague just sold her house for a 30% profit in 2 years and has now bought a lot to build brand new. We are talking upwards of $2M and they are just your local professionals – not traditionally wealthy. All their wealth has been generated by property investment. I have mentioned earlier… Read more »
Shut It Down Already
Guest
Shut It Down Already

I’m not saying she made a smart move, only pointing out that you don’t get to redefine “profit” to suit you. A better analogy would be selling Fortis to buy more Fortis. Remember how patriotz likes to use the word “fungible”?

Bull! Bull! Bull!
Guest
Bull! Bull! Bull!
Shlomo
Guest
Shlomo

#76

That’s funny, best thing I’ve read all week 🙂

Thanks for making my day, dude!

vangrl
Member
vangrl

#81 she realized her profit briefly but jumped right back in the game and in a bigger way.

Like selling 1000 shares of Fortis and buying 2000 shares of Canadian Utility.

Shutitupalready
Guest
Shutitupalready

@shutitdown, sure she realized a profit, then she used it to double down by buying land to build new.

That’s a classic gambling win.

@wouldbebuyer
Guest
@wouldbebuyer

Highest per capita immigration rate in the world. All pouring mostly into 2 cities with an ALR and Green Belt.

Developers, Corps own us.

Shut It Down Already
Guest
Shut It Down Already

“Which means of course she has not realized a profit at all but is increasing her exposure, doubtless by borrowing more money.”

Of course she realized a profit. She sold. You’re making a lot of assumptions and trying to present them as facts.

The really interesting bit of the post is that these now-buyers are actually locals. i thought only foreigners were driving the market?

bullwhip29
Guest
bullwhip29

@ #69, 70

shanghai down another 5.8% last night. some of the stories making the rounds reek of desperation…

China Tells Investors: Go Ahead, Bet the House on Stocks
http://tinyurl.com/ojehm6r

China Stock Watchdog to Investigate Market Manipulation
http://tinyurl.com/pybyjlj

say whaaaa?
Guest
say whaaaa?

@78

That and the promise of a million new rich immigrants. But that doesn’t contribute, right Pat?

Just out of curiosity, how much do you get paid per post?

patriotz
Member

@74: “My colleague just sold her house for a 30% profit in 2 years and has now bought a lot to build brand new.”

Which means of course she has not realized a profit at all but is increasing her exposure, doubtless by borrowing more money.

This is the mentality that keeps bubbles going.

Billy Bob
Guest
Billy Bob

I recently looked at condo rentals in downtown Vancouver – WOW! The rents are much higher than even a year or two ago. Appears the going rate is around $2.72/foot. Does the increase not reflect demand?

@ would-be buyer
Guest
@ would-be buyer

It’ll comfort you to know that the local politicians care about you getting priced out and the central bank is doing all it can to discourage people from taking on more debt.

would-be buyer
Guest
would-be buyer
would-be buyer
Guest
would-be buyer
I have come to the conclusion that either 1. we are special and it is truly different in Vancouver or, conversely, 2. we are seeing one of the most spectacular RE bubbles in the world and it won’t end well. I really hope it is the latter. I have been betting that it’s the latter for the last 6+ years. I am the laughing stock to friends and family who have seen their RE values increase steadily over the last 6 years while I keep crying wolf. My colleague just sold her house for a 30% profit in 2 years and has now bought a lot to build brand new. We are talking upwards of $2M and they are just your local professionals – not traditionally wealthy. All their wealth has been generated by property investment. I have mentioned earlier… Read more »
Garth
Guest
Garth

You racists are going to ruin everything I have built. Sell your homes and invest with me. It won’t end well. Just like I told you. People are Canadian all over the world. We have lots of land and if they can say ‘Canada’ then they are Canadians!

Specuskeptic
Member

After @BPOM’s post 69 and the reference to a fly-laden wall, couldn’t help but think of some Chinese History and the “Four Pests Campaign” Perhaps corrupt officials/locusts need to be added for a fifth…

(https://en.wikipedia.org/wiki/Four_Pests_Campaign)