Ban Tuesday

We’ve banned IPs for Matsui/saul and openhousemassacre as those two seem to have degenerated into threats and insults without any other content.  When you come back maybe you could think before you post.

There are a bunch of you that are on the edge as well – remember when we discussed real estate? Poo-flinging monkeys are funny in small doses, but no-one in their right mind wants to debate them.

How ’bout we start off the school year with an attempt to be civil?

 

 

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Newcomer
Member
Newcomer

Thank you.

Boombust
Guest
Boombust

Yay! About time!

Newcomer
Member
Newcomer

Here is an interesting chart with a long term trend line that happens to put the current long term trend prices more-or-less in line with rental returns.

https://cloudup.com/cPitaqJ38qB

rockerguy
Member
rockerguy

That’s a frightening chart. So either prices stay completely and utterly detached from rents, rents go massively up, or prices adjust like it’s 1981.

rockerguy
Member
rockerguy

But for rents to go massively up, that would require incomes to go massively up.. And I don’t see that happening.

space889
Member
space889

Instead of $850 for a nice 600 sq ft 1 bedroom apartment, how about $1200 for a 500 sq ft 1 bedroom apartment? That’s how rent can go up massively without looking like it is – $850 for 1br 10 years ago vs $1200 for 1br now.

tim
Guest
tim

Rents are already close to the edge of what the economy can handle. A smart landlord will not rent to someone whose income is less than 3x their rent, and tenants start to think about moving out the city above that level. We’re getting close to 50% of income going to rent now. There was already a mass exodus of families. Arrogant property owners may talk about leaving housing empty, or airbnb, but there will come a point where people make the decision to leave the area on a mass scale, and the economy swerves into the ditch. Once the spell is broken it’ll take a long time for Vancouver to come back.

space889
Member
space889

Spending up to 50% of take home pay on rent was pretty normal back in the 90s and early 2000s when I rented.

tim
Guest
tim

Gee, I guess if you did it back in the day, up hill both ways, it must be ok for it to be a lot worse now.

space889
Member
space889

How is it worse now when people are only paying 1/3 of their paycheque instead of 1/2?

gord320
Member
gord320

Totally agree with this paragraph Tim. People can/will only hang on so far before they seriously begin looking for a more amenable place.

YVR
Guest
YVR

Here is an inflation adjusted graph of YVR detached house prices. This is what the correction will look like if prices revert to the mean. Although history shows prices always drop way below the mean during a correction.

https://cloudup.com/cPitaqJ38qB

Dave
Member
I think a graph to go with would be the servicing cost of housing because that’s ultimately what drives the market. As long as interest rates stay low, we can’t expect valuations to reach historic cap levels. I think we are in unprecedented times right now. Interest rates have never been this low. Every economic recovery in the last 30 years has been spurred by interest rate decreases and the subsequent accumulation of debt. Now that we are at the zero bound, I wonder how things will play out in the next recession. I think we more or less know which is negative rates and purchasing of long bonds. Does that give us another leg up in the housing bubble? It has every other time. I see Vancouver, and other Western cities, as a recipient of excess global liquidity. We’ve… Read more »
rockerguy
Member
rockerguy
Dave
Member

Good point. But, what were the valuations at their peak compared to where we are now? From my recollection, it was much higher there.

gord320
Member
gord320

Definitely, “Whether you believe our bubble is foreign capital or local, it can’t be denied that asset price inflation is a result of low interest rates.”

plumber
Guest
plumber

Should these charts not take into account the interest rate/mortgage rate?

Its_the_ALR_stupid
Guest
Its_the_ALR_stupid

Since we’re apparently showing charts today, here’s one that visually depicts why detached prices will never, ever drop back to affordable levels again.

http://www.juneconway.com/static/media/med/1603_2371ba1f_HousingStock.JPG

I’ve posted this before, but I still never got an answer to my question: can someone please look at this chart and explain, in economic terms, how detached prices will ever again be remotely affordable for average incomes? And no, I’m not talking about the near-term correction which I agree is coming. I’m asking about long term prices.

david
Guest
david

How could Enron even possibly be anything but one of the world’s most valuable companies?

Market cap of US$186 billion….great chart…with a lot of smart, VERY influential people owning it….and millions more regretting that they didn’t.

No one could afford to have it become worthless.
And yet, . . . .

Newcomer
Member
Newcomer

You are right, but it is not particularly noteworthy. Average incomes in Vancouver are too low to afford a SFD and so, going forward, people with average incomes will live in attached housing or in the suburbs. People with above average incomes will live in SDFs in the city and rich people will live in fancy parts of town. This is generally the case in all but very small cities.

patriotz
Member

Except many US cities where the core (or much of it) is undesirable. You can add Winnipeg too.

I don’t see why anyone is even debating whether the average person should be able to afford a SFH in any desirable core area. At any rate, I’m really interested in ownership cost versus rental value rather than some construct of affordability.

YVR
Guest
YVR

You do know we have been running out of land since the earth was created? We were out of land in Vancouver during the 1981 bust where prices corrected 50%. Running out of land has not stopped busts at any other point in history.

I am not concerned what the “average” income can afford. Right now the top 1% cannot afford a house. Please explain to me how virtually nobody can afford to buy something and the price remain high? Right now it is all based on credit and a willingness to take on debt. That will change in the coming months.

space889
Member
space889

Really? Isn’t Earth a lot bigger than it was during dinosaur times? And I believe Hawaii is still creating new land. As did China rcently too?

/dev/null
Member
/dev/null

Yes, the planet was definitely much smaller way back then. The dinosaurs were exceptionally heavy and their weight on the surface caused the planet to compress down to a much more compact size. Everyone knows this.

Its_the_ALR_stupid
Guest
Its_the_ALR_stupid

I agree that prices are currently overvalued and I expect a near term correction. But I highly doubt they will correct by the 80% that you predict. I’m predicting benchmark detached prices down a much more modest 20% or so.

Incidentally, I very much want prices to crash hard – down 80% or more would be heaven. But I differentiate between what I would like to happen and what I think will happen. There are just too many factors holding up prices that I don’t see materially changing any time soon – foreign cash, interest rates, immigration, and the ALR being the biggest.

In any case I guess we will just have to wait and see what happens in the next couple of years to find out who was right.

Newcomer
Member
Newcomer

Can you explain why you think that a 20% correction is more likely than a larger correction? Is there something special about the price level from 8 moths ago? Is there a support factor that makes 1.4 M (or whatever it is) too good a deal for people to turn down? Or do you just have a gut feeling that 20% is about right?

Dave
Member
I think 10 to 20% is a good prediction myself. Vancouver corrections don’t typically give up all their prior year gains when corrections happen. Hard to imagine we give back the 30% this past year has risen. Wish that weren’t the case. We’re not in a recession and BC has some of the highest economic growth in all of North America. We still have an increasing population and interest rates aren’t going anywhere. We also don’t have a pending surge of supply from new condos. While I think the 20% tax will keep the speculators away, it’s just not enough supply and lost demand to shift us into a major correction. I think we sadly have to face the reality that an average person in Vancouver has to make major sacrifices to own real estate. I think more people need… Read more »
Dave
Member
To add to the above, I have a message to young professionals… If you weren’t born into money or don’t already have a foothold in real estate, Vancouver is a terrible place to build your life. You can find better job opportunities elsewhere and will have a real ability to advance financially. You shouldn’t stay here on the hope that things will get better. I would recommend taking control and finding somewhere else to live. That could be Victoria, Kelowna, Alberta or the States. Seattle is cheaper to live and has some of the biggest companies in the World. You also get a salary in US currency. Living is cheaper there too… gas, cars, travel, clothing, etc.. If I was 10 years younger, I would leave in a heartbeat. Hell, I’d be lying if I said I’m not considering it.
Funkey monkey
Guest
Funkey monkey

I am trying to leave, just waiting and looking for the right opportunity. Even considering taking a job that pays less. I love my job now may not like my next job.

Dave
Member

I think getting a foot in the door at less pay is probably worth it. If you work hard, you make it back up in a couple years, assuming you have valuable skills.

Ulsterman
Member

Dave i agree. CKNW hosts Steele & Drex recently had a Vancity “financial advisor” on to give new university students advice. They waffled on about investing (with what?!) and buying at Costco to save money. I emailed and suggested the best advice you could give any young person who isn’t tied down by career or kids is to leave Vancouver. Naturally they didn’t read out my Debbie Downer suggestion!

Newcomer
Member
Newcomer

Typically, they drop below the trend by as much as they have gone above it. https://cloudup.com/cPitaqJ38qB

Dave
Member

I think the fit should be exponential if anything. But I don’t think the trend means too much. That covers a period of time where interest rates feel from double digits to near zero. We’re not going to have negative double digits. Since interest rates are a major factor in that trend, I think it’s almost meaningless for the future. It may very well hold for another 5 to 10 years, but it won’t hold for 30 in my opinion, unless we have major inflation.

Its_the_ALR_stupid
Guest
Its_the_ALR_stupid

“Can you explain why you think that a 20% correction is more likely than a larger correction?”

I fully admit I don’t have a crystal ball, so 20% is just a guess. Could prices fall by 50% or more? At this point nothing would surprise me. But my estimate is more than just a hunch. It’s partly based on a linear regression model I made comparing Metro Van to other Canadian cities, plotting affordability vs per-capita housing stock. It shows that detached isn’t nearly as overpriced as it might seem. I’m thinking of putting together a chart and uploading a link, hopefully later this week.

Ulsterman
Member

Geez, if detached are not nearly as overpriced as they seem, then i feel even more like a big, fat loser! I’d like to know who all these people are affording the westside houses. Even if they fell 50% back to $2m, WHO ARE these people?

space889
Member
space889

The rich or the very talented who pays more in taxes than your total salary.

Slava
Guest
Slava

Foreign money. End (mostly from China)

YVR
Guest
YVR

Also note the ALR has more than enough land to supply SFHs for all for 50 years. Nobody though a foreign buyers tax was possible. I can see ALR rezoning as a major Liberal shift in policy in coming months. The Japan correction pretty much proved the running out of land thing bunk anyway. Prices go to what people can afford always.

space889
Member
space889

If there is profit for the developers then it will be done after the next election in the name of affordable housing!

Its_the_ALR_stupid
Guest
Its_the_ALR_stupid

You’re right that opening up the ALR would have a huge effect, but from where I sit that has as much chance of happening as Justin Bieber becoming Prime Minister.

YVR
Guest
YVR

Well look who is our PM now. Not far off Beiber.

Soheil
Guest
Soheil

People die! Canada doesn’t have huge population growth… speaking of charts, look at this one
http://www.indexmundi.com/graphs/population-pyramids/canada-population-pyramid-2014.gif
Then read about Japan, they’ve ran out of land a long time ago!

space889
Member
space889

And how many net new SFH have been added to CoV in the last 5 yeas?

YVR
Guest
YVR

How many were added in the 80s? In 1981 prices went down 50%.

space889
Member
space889

Ah I love this how about 1981 argument…..

So how many people are in CoV in the 1981 vs now? How many SFH then vs now? How many empty land / lots are around CoV vs now?

I guess you never took Chem 12 and learn about this concept called saturation?

https://en.wikipedia.org/wiki/Saturation_(chemistry)

Ulsterman
Member

Looking at the original chart i was surprised that if prices had only gone up by inflation, the 2016 long term trend price would still be $790k for a house. Even this number is not affordable by conventional metrics.

david
Guest
david

I say ban Monday. That’s the worst.

Best place on meth
Guest
Best place on meth

Unless Monday is a stat holiday. Those are the best.

david
Guest
david

Unless you still have to work. Then its even worse.

space889
Member
space889

Don’t you get 2x OT pay plus another day off?

david
Guest
david

No. That would make it better, not worse.

JinTO
Guest
JinTO

A much more cordial conversation going on today. It got really bad over the last couple days. Thanks for the effort to clean up. My two cents – it’s all psychological once the card how is crumbles and all confidence is lost were in for a world of hurt.

edward
Guest
edward

Tough when a new IP can be easily had. An auto IP ban via downvotes would be easier, but still appreciate all the work

Shut It Down Already
Guest
Shut It Down Already

That would only help stifle debate and reinforce the groupthink.

Now, an autoban based on certain keywords might work. It’s baffling that admin has allowed escalating use of racial slurs by some long-time posters, which in turn has encouraged some new arrivals.

Best place on meth
Guest
Best place on meth

Still race-baiting, are we? Pathetic.

Nobody here has attacked anyones race.

space889
Member
space889

And you still don’t know how to use a dictionary.

Funkey monkey
Guest
Funkey monkey

Yes more real estate talk less racist talk.
Anyway my neighbour took down the for sale sign. I talked how it was for sale for 3 weeks here earlier people told me that was normal ,well 6weeks went by now the sign is down.
Maybe hopping on better luck in the spring?

Ktown
Guest
Ktown

If by better luck he is hoping for less money then probably.

Patiently Waiting
Member
Patiently Waiting

Gutless. I don’t expect anything better from BC politicians.
http://www.cbc.ca/news/canada/toronto/airbnb-regulations-1.3749410

How long before this undermines the ability of entire condo buildings to get insurance and borrow money? Sure you might not airBnB yourself but what if many of your neighbours do? Will insurers and bankers see your building as an unofficial and unregulated hotel?

space889
Member
space889

Why would they care that much? Especially if they would simply raise prices to compensate for the extra risk. AirBnB is also likely to force itself onto the city like how Uber has made itself legal or semi-legal in many cities.

Patiently Waiting
Member
Patiently Waiting

From what I’ve heard, not many insurance companies will insure an airBnB. This is why airBnB offers its dubious $1,000,000 coverage. I’ve also read how lenders in various parts of the world are warning homeowners that having an airBnB will affect their ability to get a mortgage.

We’ll have to see how things turn out places like Berlin and New York. Berlin has apparently banned them, and New York is doing its best.
https://www.theguardian.com/technology/2016/jun/08/berlin-ban-airbnb-short-term-rentals-upheld-city-court

space889
Member
space889

I’m guessing insurance company will happy offer the insurance, take the premiums, and then refuse to pay out any claims for units that are rented out on AirBnB.

There are now insurance for Uber drivers. Not sure how expensive they are. I think eventually there will be AirBnB insurance for a price and likely will onerous conditions that make denying claims easy.

Patiently Waiting
Member
Patiently Waiting

Yes, and I have to wonder how many airBnB operators don’t know this. They won’t find out until something really bad happens. Which also leads me to wonder where this leaves uninvolved third parties like (unknowing) landlords, neighbours and strata corporations.

I assume some property management companies are having employees monitor airBnB and similar websites. They’d be crazy not to.

space889
Member
space889
I think buildings have their own insurance on common structure, so if say a condo had a leak that cause water damages to suites below and such, the building / strata corp insurance should cover that, if the owner’s insurance didn’t, or simply didn’t buy any insurance. But I don’t know about the conditions of that insurance. For example, if a rental restricted building had damage due to an unauthorized rental unit, would the insurance cover any damages from that. Maybe Strataman if s/he is still around can answer that. Failing insurance claims, the strata can always dip into reserve funds, or special assessments. It would piss off and punish a lot of innocent owners, but the bills have to be paid. I think the strata would likely put a lien on the unit to try to recover the money,… Read more »
Madashell
Guest
Madashell

Study: 45% of 2015 purchases in Shenzhen under false pretenses
http://english.caixin.com/2016-09-06/100985972.html
Wondering if the Lower mainland foreign buyers tax with work here?

space889
Member
space889

Thank goodness for not overstepping the censorship line and still allow thoughtful posts about nuking China and killing 1 billion+ innocent people, or calling them locusts, scum, thieves, subhuman garbage, etc. I was so worried for a second about the total clampdown on freedom of expression and discussions.

tim
Guest
tim

Careful, Dr. Evil’s finger is probably hovering over the button for your chair.

Ktown
Guest
Ktown

Let’s all just sit back this month and the listing and price drops come in. The REBGV can only manipulate numbers for so long.. including sales from frantic overseas buyers before the tax came into affect into the August numbers is a twist. September will hopefully shed more light on the extent of this correction. I wouldnt be suprised if we dont see Januarys high prices for another 10 years. Be prepared for a 30-50% actual price reduction over the next ~2years.

PAULB – could you please include ‘Price Change Down’ in your postings. I believe you used to include them?

franko
Member
franko

If the latest ban means more uninhibited baiting by Spaceshit, I’m not sure we’re any farther ahead.

space889
Member
space889

What baiting? When did team BPOM become stupid enough to respond to race baiting? I thought all their posts and opinions are honest expressions of their true feelings arising out of their love for Canada and hatred for all things evil, communist and Chinese?

Nom Nom Nom
Guest
Nom Nom Nom

Space… I wish you had been around during McCarthyism.

Oracle
Guest
Oracle

My prediction is prices remain flat this month and we test 7K inventory levels.

Hopefully my imposters are IP banned. Truth apparently hurts too much.

Best place on meth
Guest
Best place on meth

Oh, I don’t know about your inventory prediction.

Summer is over and everyone’s back in town, new listings are coming in fast on the first day of school.

So far today we have 26 detached listings on Vancouver’s east and west sides, with 2 sales.

I think inventory will resume rising from here on out.

Oracle
Guest
Oracle

jhj

Grim
Guest

I’ve attempted to do Elliott Wave analysis on Vancouver real estate for awhile, we’ve certainly had a blow off top of some kind. In my view, its either topped for good, or we have another thrust higher as long as 1.38ish million doesn’t get breached. If price action goes below that previous thrust up from 2013-2014, then the chances are very high we have reached a significant top for years to come. Price action is nearly guaranteed to visit the 2010 lows, and perhaps the 2008 lows.

Grim
Guest
Grim
Guest

Sorry, here is one that you can click: http://goo.gl/9OQKGp

Also, I had a typo, I meant 2012 lows, not 2010.

Oncebittwiceshy
Guest
Oncebittwiceshy
Grim 4 minutes 58 seconds ago I’ve attempted to do Elliott Wave analysis on Vancouver real estate for awhile, we’ve certainly had a blow off top of some kind. Grim, Nice analysis. The blow off top of some kind ……….. was the fear of being priced out of your own country ….. disappearing. In a normal market people do buy for many reasons. In a manipulated market, where real estate brokers have created this fear of Chinese taking over the city of Vancouver and the media picked it up and broadcast it throughout the province, it’s another matter. People were buying because they were afraid that if they waited to buy when they could afford to (realistically) they would be priced out. I couldn’t count the number of Global news reports we have seen over the last several years which… Read more »
Billybonger
Guest
Billybonger

Thanks BPOM…

Looking forward to seeing today’s stats.

Oracle, you truly think net listings will dive that significantly this month?

Should be interesting to watch this battle on inventory levels unfold this month, let’s see if the surge or tank as you believe.

I have no idea what will happen, will watch eagerly.

different this time
Guest
different this time

Looks at this realtors great pics. Slanted dark pics of the interior taken with an old broken I-phone. ridiculous
http://www.realtylink.org/listings/view2.cfm?url=http://images.realtor.ca/listing/reb89/medres/8/r2105008_12.jpg

Billybonger
Guest
Billybonger

Really curious to see if listings increase or decrease today!

Oracle vs BPOM

I know which side I would like to see win:-)

But will have to wait with baited breath to find out…

Boombust
Guest
Boombust

I doubt if today will be any “harbinger”. Best to wait a few weeks to see the general trend.

space889
Member
space889

Who cares? With inventory this low, good luck trying to score a deal on anything good or decent.

Billybonger
Guest
Billybonger

Fair enough.

That said, I continue to eagerly anticipate today’s numbers (and tomorrow’s and so on and so on)…

Trends start somewhere and if listings pour on post long weekend that could be an interesting signals.

That said, I hear ya…many a false start from reading too much into too little.

paulb
Member

New
444 lucky number? 😉
Sold
126

TI:9224

http://www.paulboenisch.com

Tim
Guest
Tim

Wow

Ktown
Guest
Ktown

Had me excited until I looked up last years tuesday following labour day.

New Listings 452
Price Changes 79
Sold Listings 173
TI:11792

UBC in crisis mode
Guest

Anyway big jump compared to last month, very likely duped by all the media.

Lurker
Guest
Lurker

Meaningless August is always slow.

The fact that we’re trending behind last year means that there isn’t a lot of downward pressure on prices. We’re entering a holding pattern.

Best place on meth
Guest
Best place on meth

You sure about those numbers?

Best place on meth
Guest
Best place on meth

Never mind, they are correct.

Oncebittwiceshy
Guest
Oncebittwiceshy

Not to question Paul on his stats, but Rob Chipman is only showing 117 sales … only 9 sale difference….ugly either way.

Date Sales Avg. List Avg.sale
2016-09-06 117 $794,659 $782,184

Tcg
Guest
Tcg

We’ll 8 less listings but 47 less sales! That’s a significant inventory jump. Prices won’t be too sticky if that pace of listings continues.

Billybonger
Guest
Billybonger

Thanks PaulB!

Likewise, wow!!

Oracle, did you list your house that is under construction? If not, why such a surge?

Guess it could just be that it’s beginning of month and after a long weekend.

But…wow….that’s a lot of listings…if we see a surge into 10,000 plus listings and tepid sales, I imagine things could get very interesting quickly.

Look forward to what Oracle has to say. With a name like that, he clearly has worthy insights and we should perhaps pay heed to his postulations.

Newcomer
Member
Newcomer

It’s not really a lot of listings, take a look at the New Listing Count graph here: https://docs.google.com/spreadsheets/d/1dYtxpv5aEMF-Ccyyb8sKmtHI4nQL8rqP4vEVxMx4VUc/edit#gid=0
and 10K would be a low number.

Oncebittwiceshy
Guest
Oncebittwiceshy

Paul is very generous with his stats. A big thank you, Paul.

I was actually a lot more interested in the sales. It would appear that we had an average of 42 sales per day over the long weekend.

What I find even more interesting is that there is not another 3 consecutive day period going back to 2012 on the chart, where sales were so low.

126 sales is indeed a dubious record.

Oracle
Guest
Oracle

Can’t get enough of me can you?

With regards to house, trusses are up and windows installed. Next is shingles, exterior siding, electrical and insulation. will keep you posted.

Do you even realize that prices would have to crash 70% for me to be ‘underwater’ ……meaning my entry point into real estate over a decade and half ago?

space889
Member
space889

Rain season is starting, better get those sidings and shingles on fast!

MarKoz
Member

Crispy takes credit, or does she?
“The prices were going up way too fast and if we helped slow that down, that’s good,” she said.
Ms. Clark said it is too early to tell what the impact of the foreign-buyers tax and a luxury sales tax on homes priced over $2-million has had on the market.
http://www.theglobeandmail.com/real-estate/vancouver/slowdown-shows-vancouver-foreign-buyer-tax-working-as-intended-bc-premier/article31732034/

What is the luxury tax on homes over $2 million? I don’t recall hearing about that before.

Ktown
Guest
Ktown

The property transfer tax is 2% on any amount over 2m.
“Luxury tax”

space889
Member
space889

Should be graudated like income tax, 1% for every $1M over $2M until it hits say 10% or 15%? But how would new construction be taxed? I mean Chip Wilson $50M mansion he’s building, I don’t think he’s paying any luxury tax on that?

patriotz
Member

It is graduated:

1% on the first $200,000,
2% on the portion of the fair market value greater than $200,000 and up to and including $2,000,000, and
3% on the portion of the fair market value greater than $2,000,000.

www2.gov.bc.ca/gov/content/taxes/property-taxes/property-transfer-tax/understand

And remember, it’s a tax on the transfer of the title of a property, not on construction. So Chip would pay PTT on whatever he paid pre-construction.

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