Is the end of the bubble near?

The latest spurt of ‘bubble is bursting‘ news is showing up in the local media.

Despite ever increasing sales prices, we’re also seeing a dropping sales to listing ratio month after month.

UBC’s Tom Davidoff, an associate professor at the Sauder School of Business and a real estate analyst, says the first signs of a bubble bursting might be sales volume slowing down and inventory rising. A rising rental vacancy rate could also be indicative of the market slowing down as well as lenders becoming more cautious about issuing and underwriting mortgages.

In the last few months, all of these red flags have been appearing in the Vancouver market, aside from a growing rental vacancy rate.

At the end of May, the CEO of Scotiabank, Brian Porter, said they were “a little concerned” with housing prices in Vancouver and had been easing off their mortgage lending business because of too much risk.

Read the full article over at Global News.

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Oracle
Guest
Oracle

No, the end of the bubble is not near.

Immigration and foreign money Inflows are getting continue and are increasing.

burntout
Guest
burntout

From the last thread needed to be brought here as last post. thanks Bubble tea

BubbleTea
7 hours 34 minutes ago

Second rant by Marc Cohodes on Linda Steele Show on July 10th. A must listen.
http://omnyapp.com/shows/lynda-steele-show/vancouver-real-estate-w-marc-cohodes-the-lynda-ste

squeak
Member
squeak

I will vote for Marc, please take the job as a Premier and Prime minister. We need you.

Finally a breath of fresh air.

CanNeverThinkOfAGoodName
Member
CanNeverThinkOfAGoodName

Me too.

Dave
Member
Bubbles don’t always fall under their own weight and previous Vancouver real estate corrections have precipitated by some external force, such as rising interest rates or the global financial crisis. People who have timed bubbles in the past are sometimes just lucky. A bubble by definition is irrational and as they say, the market can stay irrational longer than you can stay liquid. From that viewpoint, I think the real questions to ask are how do you define the bubble and how to you measure when it pops. I don’t think at this juncture, people are in agreement with what is really going on. Some say it’s immigration and foreign money, others not. Where’s the evidence of the bubble? When I listen to Marc, I don’t hear much of an explanation beyond anecdotes. I recognize people here love to hear… Read more »
patriotz
Member

“previous Vancouver real estate corrections have precipitated by some external force, such as rising interest rates or the global financial crisis.”

Prices in Vancouver started falling in April 2008, months before the global financial crisis. The GFC was actually responsible for prices going up again due to rock bottom interest rates. But of course external factors can bring about falling prices in any market, as we are seeing now in Alberta.

Dave
Member
I recognize that. Remember, I was the guy who called all that? I said shallow correction (not more than 10%) before the financial crisis hit and bumped the number to 15% as the bad news started coming in. I also called the recovery and the timing of the recovery. I still chalk up that correction to the financial crisis and I don’t think the softening market ahead of the crash is somehow separate from that. Anyway, why you lecturing the guy who got it right? I remember being laughed at by pretty much everybody for bringing up the words, ‘quantitative easing’ and predicting that lower interest rates were coming. I’m not sure if we can read those posts from that time, but it would make for interesting reading. What I did get wrong is the last two or three years.… Read more »
Best place on meth
Guest
Best place on meth

“What I did get wrong is the last two or three years.”

That last couple of years would coincide with china’s crackdown on corruption as money fleeing the country greatly intensified.

StupidityCheck
Guest
StupidityCheck

You called for a soft landing. Didn’t happen.

HAMster
Guest
HAMster

The economy wants to contract naturally, but central banks are trying to go against “nature” and keep this growth cycle going with lower interest rates. These central bankers cannot see the obvious that we are at the end of a debt cycle and we need a natural reset. By swimming against the tide they are just postponing this inevitable reset and they will cause an even bigger crash in the bond market which will take down all economies with it.

Or, maybe they do see this, but for some reason have chosen to continue to pump for some unknown reason?

Dave
Member

Nobody wants to be the guy to end the party. Maybe it starts in Japan but who’s to say they can’t keep it going for years and years longer? People have been saying the carry trade is going to end for at least a decade.

The theory is that the bond market is always right. How can it be? Why would European bonds trade lower than US and Canadian bonds? Seems obvious what’s riskier.

The debt cycle and the last 35 years have always been troubling to me. I try to understand why this shouldn’t matter to economic growth and stability but I haven’t heard anybody make a compelling case.

realist
Member
realist

Interest rates are extreme, in fact, the most extreme in recorded history. No lesser expert than the chief economist of the Bank of England, Anthony Haldane, asserted last year that interest rates are the lowest in five thousand (5000) years!

http://ftalphaville.ft.com/2015/06/29/2133245/5000-years-of-dreadcharted/

realist
Member
realist

As to the role of credit growth in the economy, I don’t understand the position of mainstream economists that it is irrelevant. Few economists, mostly of the “Austrian school”, have addressed the issue as a significant one. The American economist, Hyman Minsky, wrote extensively on the issue. Today, Steve Keen, Professor of Economics at Kingston University, has built upon Minsky’s work and continues to publish on the subject:
http://www.debtdeflation.com/blogs/

Dave
Member
Imagine some type of debt reset scenario. The history of central banking is that we keep things going until we hit a wall. And then we change things up to get around it and carry on. So say we hit a debt wall… what’s the out? Whatever the wall is and whatever the way around, I don’t think we end up with a Great Depression type scenario. I think the powers that be fear that scenario so much that they will try and do anything to stop it. I think they drop money from helicopters before things get real bad. Ben wasn’t joking around. They’ll hide and bury money to create a money excavation industry if they have to. I say we go through a period of absurd economics before people start listening to guys like Hyman or Keen.
Dave
Member

Here is how I see the mindset of the ‘social engineers’ elected to City Hall and the top bureaucrats… They take all sorts of actions to make Vancouver a more progressive place. They see increasing house prices as a vote for their progressiveness. They think, “people love what we’re doing so much, they’ll pay anything to live here.”

I kid you not, that’s what they think.

And then people turn around and complain about high housing prices and it’s a cognitive problem for them, especially when they view themselves as champions for the little man.

Oracle
Guest
Oracle

The S&P has just hit a new record high! There is chatter in the street that QE is coming and rates are going to ZERO in Canada and the USA. The CDN 10 year bond is now below 1%. Wow. If that doesn’t tell you zero rates are coming, i don’t know what will.

You will see sub 1.7% five year mortgages in Canada unfortunately.

Dave
Member

I made this point almost ten years ago. Lower rates are going to change the affordability equation and that’s why I felt a correction wouldn’t go too deep because affordability hadn’t escaped historic norms.

But this time around, it has. Affordability is now above levels we have ever seen in Vancouver. And lower interest rates will have less effect on that equation.

If a correction happens, I think it goes deeper and lingers longer for those reasons.

Fear monger
Guest
Fear monger

Some decent sub million houses are coming on the market in Richmond.
It started in Richmond and will end in Richmond.

Dave
Member

It feels like 2006/2007 to me right now. I am seeing young professionals fleeing the City. Places like Squamish, Kelowna and Victoria have been strong for that reason. People who have chosen to stay have been buying out of fear of being priced out and I have seen a lot of local panic buying. It’s hard to get trades right now and everybody in the real estate industry is busy.

I agree with your point and I think looking for parallels from 10 years ago can give insight to the cycle.

Newcomer
Member

”decent sub million houses” such a modern expression

BubbleTea
Guest
BubbleTea

Wow. Lynda Steele is on fire on housing. Shes got another excellent guess Josh Gordon on housing in Vancouver. “We’re in a full blow bubble!” Another must listen.

BubbleTea
Guest
BubbleTea
Fear monger
Guest
Fear monger

Lynda Steele is a fresh breath on CKNW.
Not like the RE pusher Bill Good.

CanNeverThinkOfAGoodName
Member
CanNeverThinkOfAGoodName

Love her.

Newcomer
Member
The future direction of the market is unknowable at this point. Why? Because it actually is different this time. We’ve never been an international monetary system at 5000-year lows before. What we can say is that the risk of overpaying for assets is extremely high. Japan has shown us that low rates do not necessarily prevent deflation, even across the board deflation, and certainly not deflation in one asset class. Another thing we can say is that, if there is a substantial drop ion RE values, it is unlikely they will be reversed by monetary policy, as any drop will begin in a super-accommodative environment. Could east side bungalows be selling for three million and ordinary west-side four bedrooms be selling for seven million next year? Sure, why not? Does that possibility make today’s RE a good investment? Well, probably… Read more »
HAMster
Guest
HAMster

Asian real estate conference ridicules Canadian government’s foreign home buyers estimate.

http://www.scmp.com/property/international/article/1987371/asian-real-estate-conference-ridicules-canadian-governments#

They say it’s much higher than 3.3 percent but even they don’t know for sure.
“That is the problem. No one has hard data.”
“But no one really knows.”

patriotz
Member

Chinese Dreamland

This doc examines the rise and fall of the Chinese property market through the experiences of Yana, a young entrepreneur, and her colourful (if unconventional) rent-a-foreigner business.

patriotz
Member

Vancouver can implement vacancy tax on empty homes: B.C. government

(Eby) said the only reason the Liberal government is doing something now is because they’re looking at poll numbers in Metro Vancouver. “The action they’re allegedly taking is, as always, the absolute least that they could do,” he said.

“They’re asking the city of Vancouver to do their job of protecting their interests of Metro Vancouver residents who can’t afford to buy a place, simply because they’re unwilling to do it themselves.”

Dave
Member

The City of Vancouver politicians don’t care much for affordable housing. They care about getting re-elected.

Don’t get me wrong, they like talking about it to keep people thinking they care. But, what they are no finding out is the limits to that lie. Now they are panicking because people are finally rising up and seeing that talk is cheap.

patriotz
Member

Right, the “solution” you’ve supported is dropping development fees, which any knowledgeable person knows would simply increase developer profits.

How about a 50% speculation tax, which I pointed out has been proven to lower prices? Oh I forgot, the provincial government is explicitly opposed to any action which may result in lower RE prices.

Dave
Member

I’ll throw you a bone here. I think you have been right on the supply side issue regarding vacant apartments. I think the truth is closer to what you have maintained than what I thought before, going back over the last 8 years.

But you’re still wrong on supply vs. market price. Increase supply and prices come down. It’s basic supply-demand economics.

I got the slope of the curve wrong (because of demand to buy vacant apartments), but you don’t acknowledge it exists.

How do you tax a flipped pre-sale? Capital gain? I’m not against that either. We don’t have to do just one thing to address the problem.

Dave
Member

I’ll tell you guys what people at the City think and say behind closed doors. They truly believe that prices are high in Vancouver because it’s the best place on Earth. The level of smugness is beyond belief and many of our bureaucrats personally feel proud about our current situation. I kid you not.

The media and a lot of the discussion is sort of based on some kind of complicit conspiracy between politicians, developers and foreign money. The truth is less sensational and sexy and the reality is as common as any other time in history where leaders just have no idea about what’s going on around them. They’re too busy admiring the greatness they have created.

CanNeverThinkOfAGoodName
Member
CanNeverThinkOfAGoodName

We need to get Michael Moore in here to make a movie. I’d love to see the results of his interviewing City Hall people, getting them to talk about best place on Earth.

That, juxtaposed against interviews with various people hurt by the bubble before, and after the air goes out. And the movie would have fantastic visuals of the changing neighborhoods, and quotes from Jane Jacobs, and the theme song of paving over paradise, and all the great stories we already have of greed and ego and traffic accidents. The script has already almost written itself.

patriotz
Member

“The media and a lot of the discussion is sort of based on some kind of complicit conspiracy between politicians, developers and foreign money.”

“Complicit conspiracy”? It’s an open alliance. Quick, who’s the chief fund raiser for the BC Liberals? And you think Christy Clark has no idea what’s going on? She knows exactly what’s going on.

http://wpmedia.vancouversun.com/2015/06/e_p4_rennie.jpg?quality=55&strip=all

Dave
Member

I was referring to City Hall. Clark knows what’s going on. I didn’t suggest otherwise.

patriotz
Member

Since Christy isn’t on the forum, how about enlightening us on what’s really “going on”?

And I’m not too interested in what anyone claims unnamed bureaucrats are saying. I’ll stick to what the politicians are saying and doing in full view.

Dave
Member
If you think what politicians say in public is the same as private, then I don’t know what to tell you. Believe that lie all you want. I’m with you on watching actions though. As they say, actions speak louder than words. Maybe the things I say are all fantasy or maybe the things I say are informed by actual experiences. Believe it or don’t. I don’t care. I’m not going to prove these things to you because I can’t do that in public. So, here’s my experience… the people at City Hall are drinking the koolaid. The people at the Province aren’t. You agree with me on Clark it seems, but maybe not City Hall. I’m more sure about that than the Clark. I could be wrong too because I’m just basing that on a small number of experiences.
CanNeverThinkOfAGoodName
Member
CanNeverThinkOfAGoodName
At this point one would have to say that either (1)they drank the kool-aid, or (2)they are dishonest/corrupt. There are no other options; it is not rational to take the position that there is not something deeply wrong with the housing situation for middle class residents in Vancouver, something that needs a seriously radical overhaul.. To deny that there is is either to have drunk the kool-aid or to be dishonest So, since I like our City Hall people on the whole, I appreciate Dave’s explanation that from his experience with some of them it seems they drank the kool-aid. I would much rather believe that than that they are dishonest because, as I said, I think they are basically good people doing some good things. (Please forgive me if my remark does not sound humble enough to someone who… Read more »
Dave
Member
I posted this above and in the wrong spot… Here’s how I see the mentality of the ‘social engineers’ elected to City Hall and the top bureaucrats. They take all sorts of actions to make Vancouver a more progressive place. They see increasing house prices as a vote for their progressiveness. They think, “people love what we’re doing so much, they’ll pay anything to live here.” It’s really that simple and they even verbalize that more or less. Going forward, what’s more likely? 1. They drop the koolaid and rethink their smug view, or 2. Talk about fixing things but continue down this path. Pretty obvious, right? That’s why I think these guys need a bit of a reality check. They need to realize that there are other ‘progressive cities’ that people enjoy living in. The Province handed them another… Read more »
CanNeverThinkOfAGoodName
Member
CanNeverThinkOfAGoodName

Thanks, that’s very interesting and perhaps not too surprising given the general trends in 21st century of commodifying everything, so that value is understand as nothing but what you can sell a thing for. City planners should consult biologists and anthropologists, ethologists and sociologists, about what environments we need as human beings, not only real estate agents and accountants.

Zero Down Forty
Guest
Zero Down Forty

BNN on the peak bandwagon:
“Why Vancouver housing may have hit its dot-com bubble peak: , with vid

http://www.bnn.ca/News/2016/7/11/Why-Vancouver-housing-may-have-hit-its-dot-com-bubble-peak.aspx

“There’s a good chance Vancouver’s hot housing market has hit its peak, following a similar pattern to that of crashes in oil, gold prices and the dot-com bubble, according to LePoidevin Group’s senior vice-president and portfolio manager.”

Best place on meth
Guest
Best place on meth

40 listings today for detached houses on Vancouver’s east & west sides.

4 sales.

paulb
Member

New
425
Sold
112
TI:8804

http://www.paulboenisch.com

ttul
Member

Holy shit balls – that’s a shit tonne of new listings.

franko
Member
franko

News travels fast, but I’d give it another 2 weeks for the real listings explosion to kick in. It should take about that long for sellers who have been holding out for the last buck to spruce up their abodes and make the final preparations.

Its_the_ALR_stupid
Guest
Its_the_ALR_stupid

http://www.straight.com/news/734326/justin-fung-open-letter-those-who-play-race-card-vancouver-housing-affordability-debate

Apparently it takes a white guy (Pete McMartin) to say that blaming China for our housing crisis is racist, and a Chinese guy to say it isn’t.

We live in interesting times.

Best place on meth
Guest
Best place on meth

Pete McMartin, Bob Ransford, Garth Turner, Cam Muir, Bob Rennie, Gordon Clark, all race-baiting white boomers using their pulpits for their agenda of personal profit.

All of them are sell-out traitors who love the dirty money coming from china as it makes them richer.

Combat roach
Guest
Combat roach

Justin Fung: An open letter to those who play the race card in the Vancouver housing affordability debate

“Every time we make progress on trying to address housing affordability, we end up getting sidetracked and pulled back to square one with cries of racism. We’ve already seen Gregor Robertson and Bob Rennie do it once, calling out academically peer-reviewed research done by Andy Yan as being “racist”. Now it is Pete McMartin of the Vancouver Sun and Charlie Smith of the Georgia Straight just days after Mike De Jong’s foreign ownership “data” got debunked as being completely irrelevant.”

http://www.straight.com/news/734326/justin-fung-open-letter-those-who-play-race-card-vancouver-housing-affordability-debate

CanNeverThinkOfAGoodName
Member
CanNeverThinkOfAGoodName

Inspired.

Best place on meth
Guest
Best place on meth

There are a few good ones in the media to offset the greedy, white race-baiting boomers like McMartin.

http://www.cknw.com/2016/07/11/editorial-stop-tossing-the-race-card-into-the-housing-debate/

southseacompany
Member
southseacompany

“B.C.’s soaring housing starts trigger construction cheers, economists’ concerns”, Vancouver Sun
http://vancouversun.com/news/local-news/b-c-s-soaring-housing-starts-trigger-construction-cheers-economists-concerns

“Housing starts jumped 40 per cent in B.C. in the first half of this year over last, according to CMHC. That spike has pushed the starts trend in the region to its highest level since 1990.”

“For Andrey Pavlov, a professor of finance at Simon Fraser University’s Beedie School of Business, the combination of slowing sales, increased listings and this big jump in housing starts makes the real estate market somewhat uncertain.” “I don’t know if a crash is coming and I only really see imminent signs, but we’re in an extremely risky position,” Pavlov said Monday.”

southseacompany
Member
southseacompany
space889
Member
space889

World has operated on an international monetary system for most of its recorded history – gold, accepted anywhere in the world for most of the history.

btw, I remember a few years ago, there was the 15K, 16K, 17K, and maybe 18K inventory parties. Now we have sub 9K inventory and that’s going to cause people to panick and dump properties?? Seriously? How delusional can the racist moron bears on this blog get?

StupidityCheck
Guest
StupidityCheck
Shut It Down Already
Guest
Shut It Down Already

But you’re not racist, right?

Check yourself.

ostritch
Member
ostritch

So far this is the only comment on this thread that makes sense.

space889
Member
space889

Btw, interest rate can say 0% for as long as central banks want cuz when the market is the central bank and central bank only, it gets to set the price.

BubbleTea
Guest
BubbleTea

The Quebec government, running a cash-for-visa program labelled a “fraud” and “scam” by critics who say it hurts British Columbia, received a record-breaking number of rich immigrants in 2015.
“The silence from the B.C. government has been absolutely startling,” said New Democratic Party MLA David Eby.
“every British Columbian who hears about the Quebec program is “appalled,” and yet the Clark government “won’t go to bat” for them.”
http://vancouversun.com/news/national/quebec-immigrant-program-increases-in-popularity-with-downsides-for-b-c/

patriotz
Member

Why should it hurt BC to have rich immigrants? Would you rather have poor immigrants?

What hurts BC is government policies that encourage rich people to park their wealth in RE and not pay their fair share of taxes.

burntout
Guest
burntout

These are not immigrants they are money launderers .

franko
Member
franko

Why would it hurt BC to have rich immigrants???

I sure hope your job in the ministry is confined to sharpening pencils and taking out the trash!

different this time
Guest
different this time

Exactly !
they contribute nothing to economy after their tiny transfer tax. Then the plant the wife, kids and old grannie here and back to do some more looting at home

Best place on meth
Guest
Best place on meth

“Would you rather have poor immigrants?”

Poor immigrants work hard and pay more income taxes than these crooked money launderers.

Poor immigrants adopt our language and culture and make every effort to integrate into our country and strive to become real Canadians while the parasites come here to set up a parallel country like the shithole they came from.

Yeah, bring on the poor immigrants.

CanNeverThinkOfAGoodName
Member
CanNeverThinkOfAGoodName

“Why should it hurt BC to have rich immigrants? Would you rather have poor immigrants?”

Seriously? You’d rather be a pit stop for snobs wanting to exploit you than a door opener for people who want to join your team?

Hyper-mega-Bull
Member
Hyper-mega-Bull

cherry picking stats to get headlines.

month-to-month? people only look at that when they want to cherry pick numbers.

sales to listing ratio? who cares. inventory is very low so prices aren’t going down.

people are just listing above market and then having to relist at more sane prices if they are actually serious about buying.

Dave
Member
I agree. It’s way too early in the game to call a top. The bull case is that the market started much earlier this year and therefore, ended earlier. Compare sales, prices and inventory to year over year levels and this is still bull territory. Until we get over 6 months of inventory, don’t expect prices to change, and even then the lag is about 6 months after that happens. We’re not going to know if this year was peak frenzy until early next year. Until then, we’re all just speculating. The truth of the matter is that right now we’re still in a bullish uptrend and that will remain the case until we’re in a downtrend. Sounds simple but people will argue otherwise at times. And don’t get me wrong, I’m calling bubble and I think we might squeeze… Read more »
BubbleTea
Guest
BubbleTea

Beijing ‘will respond with FURY and AGGRESSION’ after court ruling on South China Sea
http://www.express.co.uk/news/world/688752/South-China-Sea-dispute-Beijing-rejects-court-ruling-US-warns-further-aggression

Madashell
Guest
Madashell

It starting: Today before the ruling the Chinese sunk Vietnamese boats, who knows what they’ll do next .
Two Chinese vessels have rammed and sunk a Vietnamese fishing boat near the disputed Paracel Islands in the South China Sea, an official says.
“They not only sank the fishing boat but tried to prevent other boats from rescuing the fishermen,” said Phan Van On, a spokesman for the Quang Ngai provincial search and rescue agency.
https://au.news.yahoo.com/world/a/32031289/chinese-boats-sink-vietnamese-fishermen/#page1

Best place on meth
Guest
Best place on meth

The chinazis need to be obliterated, wiped off the face of the earth.

ostritch
Member
ostritch

You and Oracle need to start a road show.

MikeS
Member
MikeS

And a house we were vaguely interested in … in Aldergrove… just went for $950k. That’s about $150k over asking.

Hyper-mega-Bull
Member
Hyper-mega-Bull
Funkeymonkey
Member
Funkeymonkey

950k in aldergrove you can have it! Unless its a hobby farm that’s nuts! I would like to see the listing.

Its_the_ALR_stupid
Guest
Its_the_ALR_stupid
Since the topic of this thread is “Is there a bubble?” I think it’s important to recognize that there are 2 very different housing markets in the region: detached houses and condos. If you look at the numbers, condo prices in the long term have moved much more closely in line with inflation than detached houses have. You could even argue that condos aren’t really in a bubble at all, as supply has mostly kept up with demand. It’s really detached houses that have gone “full retard” in the last 10 years. So is that where the bubble is? I’m not sure – we have the same number of detached houses in the region as we had 25 hears ago, and nearly double the population. So you could argue that there is no bubble here either, but for different reasons.… Read more »
Dave
Member

You sound like me. Sure you’re not me?

Oracle
Guest
Oracle

Too many people in the pipeline to get a PR in Canada now. Too late….

Thats why rents are going through the roof. 1000 people a day are coming into Vancouver via the various temporary immigration stream. Especially the 10 ear visitor visa. I got 4 relatives coming on the 28th expecting to stay for 2 years…go figure.

The Trudeau Gov really doesn’t care what goes on in BC. They are immigration whores while BC Libs aka Christy is the RE whore.

wpDiscuz