Cautiously optimistic

There seems to be a shift if then Vancouver real estate market lately and that has some people excited about a potential return to sanity, but we’ve  seen versions of this story before.  BearVancouverite shares some thoughts on why they remain ‘cautiously optimistic’ and a question about the future:

Some posters here are counting their chickens before they hatch. I’m with Ulsterman in being cautiously optimistic.

We all need some perspective here:

1) Total inventory is still below 10k. In previous years even 15k+ inventory saw a mostly sellers market.
2) The superb chart that Brian Ripley posted shows that the purple dots are leveling off, at an absorption level ABOVE 2015 and 2014 still. I hope this continues to drop.
3) News reports show that condos are still selling at a decent pace
4) Even a 50% drop in Summer 2016 listing prices only resets prices to maybe 2013 levels. Most houses I see listed in Killarney for instance are as of yesterday listing for $2.2-2.8M. Going down from there to $1.1-1.4M is still above what almost every bear here was willing to pay in 2010.

Here’s my question, and I honestly want to know because I’m trying to figure out at what point I should seriously consider buying. If there’s a 50% drop, and a Killarney 120 year old near teardown is selling for $1.2M, how many of the prominent bears here (including vangrl, yvr, Hamster, BPOM, LS in Arbutus, and UBC in crisis) would recommend a friend to buy at that point?

Btw as a counterpoint to my above caution, here’s my personal observations:

1) I’m seeing a lot of Killarney listings SFH come up now. Far more than I noticed throughout summer.
2) In general I’m seeing more 3BR+ listings per day than during summer, although there’s still very little coming up.
3) I’m seeing a lot of higher quality SFH being listed. Eg not just teardowns
4) Some of the listings I see have descriptions which include the realtor saying “lived in by long term owner” or “for sale by original owner” or “owner of 40 years” etc. So just observationally some of the inventory coming online is from locals finally willing to sell.

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I\'m With Stupid V
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I\'m With Stupid V

“Here’s my question, and I honestly want to know because I’m trying to figure out at what point I should seriously consider buying. If there’s a 50% drop, and a Killarney 120 year old near teardown is selling for $1.2M, how many of the prominent bears here (including vangrl, yvr, Hamster, BPOM, LS in Arbutus, and UBC in crisis) would recommend a friend to buy at that point?”

Did anyone actually reply to this question?

ostritch
Member
ostritch

Any good things to eat in Vancouver? I’m getting bored of my usual hangouts.

Billybonger
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Billybonger

Oracle are you now changing your month end (updated to year end) prediction for 7,000 listings?

You seem to be flip flopping on this.

Change your opinions on the fly. Is that Trump University 201? Advanced training courses for the especially gifted? Did you get a scholarship to attend?

You are all over the place. Prices below Oct 15 and you buy another house. I call BULLSHIT.

UBC in Crisis Mode
Guest
UBC in Crisis Mode

This Dunbar house used to be cheap:
Sale Date August 9, 1992
Sale Price $306,000

Now just sold around $2 millions (for the lot?).

southseacompany
Member
southseacompany

“IMF warns Canadian recovery to face downside risks on low commodity, housing prices”, EconTimes

http://www.econotimes.com/IMF-warns-Canadian-recovery-to-face-downside-risks-on-low-commodity-housing-prices-319468

“The International Monetary Fund has warned the Canadian economy to face downside risks in the near term due to a sustained period of low commodity prices coupled with a possible housing downturn in two of the country’s biggest cities, reports said.”

ostritch
Member
ostritch

We really need the IMF to state the obvious aye? I hope we don’t pay them for this.

southseacompany
Member
southseacompany

“Low Interest Rates Have Created New Housing Bubble, Says UBS’, Fox Business

http://www.foxbusiness.com/features/2016/09/27/low-interest-rates-have-created-new-housing-bubble-says-ubs645268.html

“Housing bubbles are inflating in major cities around the world, with Vancouver and London most at risk, according to Swiss lender UBS Group.”

southseacompany
Member
southseacompany

“Revealed: the city with a bigger property bubble than London”, The Telegraph

http://www.telegraph.co.uk/property/house-prices/revealed-the-city-with-a-bigger-property-bubble-than-london/

“London has been replaced by Vancouver as having the frothiest property market of any major city in the world.”

southseacompany
Member
southseacompany

“Vancouver named as the financial center with the world’s riskiest housing bubble”, CNBC

http://www.cnbc.com/2016/09/27/vancouver-named-as-the-financial-center-with-the-worlds-riskiest-housing-bubble.html

“Vancouver in Canada has been identified by Swiss bank UBS as the global financial center with the riskiest housing bubble.”

“Dean Turner, an economist at UBS Wealth Management, told CNBC Tuesday that prices were being driven by optimism and capital inflow, but added that central banks were also playing a part.”

patriotz
Member

Canadian homebuyers expected to bear costs of tighter mortgage insurance rules

Residential mortgage insurance premiums are likely to increase for homes in hot real estate markets as a result of beefed-up capital requirements for Canada’s mortgage insurers coming into force next year…

“We believe Canadian homebuyers will absorb the bulk of these higher costs directly or indirectly via higher mortgage interest rates,” (analyst) Routledge said in a note to clients Monday

And that’s the flaw in the “low rates are here to stay” argument. They might stick around for the big guys, but not for you.

YVR
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YVR

As prices start to tank (and they are) credit becomes more expensive and lending standards tighten. BoC rate does not matter.

history
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history

‘ I’m trying to figure out at what point I should seriously consider buying. ‘

you must be patient and wait, wait, wait for it, Tulip Boy…..dip buy late 1932, but do not commit all your capital…. perhaps deploy some of it to buy a form of Insurance. With your home purchase, do not get too carried away, and prepare to sell (flip) late 1936.

Lurker
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Lurker

I don’t trust anyone who thinks Brian Ripley’s muddled garbagey mess of data he calls charts are ‘superb’.

vangrl
Member
vangrl

So crazy. Who would buy these places? Listing prices are all over the map, it’s as though realtors haven’t a clue
https://www.zolo.ca/vancouver-real-estate/3320-e-44th-avenue

Combat roach
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Combat roach

Delusional drunken junkies, sobering will take some time along the dreadful headaches and vomiting.

YVR
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YVR

It is not the realtors. it is the owner/sellers who have no clue. All realtors will list at the lowest price rather than a higher price if they can convince the owner. The commission diffence is nothing. Having said that the most important part for the realtor is getting the listing in the first place so sometimes that starts out at a price the realtor knows they will never get knowing the seller will lower the price over time. In the end the greedy owners end up chasing the market down and get less.

vangrl
Member
vangrl

I think they meant “temporary view of nothing”

https://www.zolo.ca/vancouver-real-estate/602-e-61st-avenue

vangrl
Member
vangrl

lots of reduced, that’s for sure
https://www.zolo.ca/vancouver-real-estate/page-4

vangrl
Member
vangrl
Bear Vancouverite – Not sure you should base your decision on what others are planning on doing. I’m in no hurry to buy, and I really don’t (truly) mind renting. I’ve owned property a few times over my life, so it’s not really a goal to “get into the market”. For some it’s forced savings, not to mention massive leverage opportunity, so their (or your) decision may be more based on that? Saying that, if prices came down to a price that made more financial sense to buy than to rent then I would definitely consider buying. I think these crap properties that sold for $1.5M on the East Side could fall pretty hard. I think many of them were bought by small time developers looking to flip, and that party is over. If they start falling then watch out… Read more »
Oh NO
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Oh NO

East side houses down 20% FACT

Boombust
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Boombust

Referring to prices? If so, yes.

Boombust
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Boombust

With regard to month over month sales from August, sales are down almost 50%.

Bear Vancouverite
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Bear Vancouverite

Condos appear pretty active to me. I think a few new developments coming online for presale will be a nice litmus test. Primrose on Cambie for instance. I think the case can be made that Condos are truly overinflated while SFH’s might have more stickiness in pricing sheerly due to limited inventory.

Like you and Patriotz I’ve been a owner, renter, landlord, multiple times. I prefer owning and prefer not being a landlord, except maybe indirectly in an REIT.

Cheers.

vangrl
Member
vangrl

If you’ve been in the game numerous times then maybe you are in a position where rates don’t matter, you may even be in a position where you wouldn’t need a mortgage at all.

If that’s the case then the decision is much easier to figure out, the only thing that’s hard are your emotions around it, and we can’t answer that part of the equation.

Bear Vancouverite
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Bear Vancouverite

Alas you give me too much credit. unlike some, I cannot buy a house with cash.

vangrl
Member
vangrl

To clarify, I meant the decision based on the financial side of things.

Boombust
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Boombust

Condos are cooling fast; they are being bought by a lot of young newbies who haven’t gotten “the message”. Yet.

Oracle
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Oracle

I’m still calling for prices to hold up meaning they won’t dip below 12 month ago levels. If they do, I’ll buy another detached home.

The 10,000 listings level has been breached. This was a list signal for many realtors. I expect inventory to quickly go up to 11K. If prices start dropping and panic sets in, we might (probably not) see October 2015 prices.

And I do change my views based on changing data. I’m not a Garth T.

Shut It Down Already
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Shut It Down Already

So you think that when inventory was low realtors were somehow holding listings back, even though number of realtors per listing was at an alltime high and many needed the work?

Whistler or Bust?
Guest
Whistler or Bust?

Oracle I think you offer some good points here and you take more than your share of abuse. Further, the number of bulls seems to have declined here so its good to hear the other side.

That said, if you believe that the average realtor has a “list signal” like a 200 day moving average or the like you are nuts. 99% are sleazy sales people who will do anything (including ripping off their clients) to make a sale. They have no more knowledge of the market (actually less) than anyone on here and have no tools whatsoever to affect a sale. (Other than to tell their clients to lower their price)

vangrl
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vangrl

why was 10K a list signal? why wait for inventory to build before listing? weird

Oracle
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Oracle

Many realtors are in the speculation game themselves; owners. One thing that may unsettle them is the 10K breach.

vangrl
Member
vangrl

aha I get it, lower inventory means prices may keep going up, when that stops then it’s time to sell that sucker

Best place on meth
Guest
Best place on meth

It’s fight night!

Oracle
Guest
Oracle

Trump killing it. Hillary has no plan.

paulb
Member

New
306
Price Change
83
Sold
142
TI:10,019

http://www.paulboenisch.com

vangrl
Member
vangrl

damn I read the price changes as sold at first, that was exciting for a second

Oracle
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Oracle

Thanks for the price change data !

Ktown
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Ktown

On the other hand i do believe oracle will be listing his half built sawdust shack hoping for a quick sale before it bankrupts him.

Ktown
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Ktown

Going to need alot more than 10k to swing things around.. i do think next month we should see a good jump though. Even 1k a month more would be great.

BubbleTea
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BubbleTea

Happy 10,000 Vancouver! So much for your 7,000, Oracle.

Plato
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Plato

15000 by July, i’m calling it.

Boombust
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Boombust

Far more than that, my friend.

Confucius
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Confucius

The Oracle posting count indicator is off the charts. The market must be crashing hard.

Plato
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Plato

Amature buiders in surrey are starting to realize they are fcked. Leveraged up with mortgages and auto loans. Somebody gonna get hurt real bad.

Boombust
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Boombust

Source?

Plato
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Plato

Speak with any of the private mortgage lenders in Surrey they will tell you lots of fear that the chiney (chinese) are gone. Many left wondering who’s gonna buy them now?

Boombust
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Boombust

The locals at prices which are in line with their actual incomes? Sounds like “a plan” to me.

Boombust
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Boombust

I do believe that; he is working overtime trying to re-inflate it with the same “oracle-like gibberish” heard in ancient Greece.

Or, maybe he’s a Holy Roller speaking in tongues?

Billybonger
Guest
Billybonger

Good point

Here is Oracle telling it like it is…yet his main quantitative forecast is looking like he is completely out to lunch.

Ya I was wrong but trust me anyways?

Trump University 101.

Billybonger
Guest
Billybonger

Okay, so….

Oracle now says he was WRONG about listings (dramatically, imho…like an off the charts epic miss) but he is right about everything else.

Sounds like he went to Trump University to me.

Boombust
Guest
Boombust

Well they Do say now that various fault lines in Ancient Greece spewed up gases so that people in many of the oracles were therefore “not in their right minds” and spewed gibberish as a result.

southseacompany
Member
southseacompany

“Lab research shows inflation may be all in your mind: Don Pittis” CBC News

http://www.cbc.ca/news/business/inflation-economy-stephen-poloz-1.3775838

“Consumers try to interpret or outguess central banks’ interest rate predictions”

“The traditional theory — one that many still ascribe to — is that low interest rates make money cheap. Then people feel free to borrow, invest and spend, thus strengthening the economy. That drives inflation up.”

” If inflation is created in our mind by our expectations, then last week’s comments by Poloz that retirees should expect interest rates to be “lower for longer” will just make people, especially those saving for retirement, clutch their money more tightly.”

supersogs
Guest
supersogs

Not sure if this has been previously posted but good analysis and site to follow:

http://vancitycondoguide.com/what-is-happening-to-sales-prices-in-vancouver/

Bear Vancouverite
Guest
Bear Vancouverite
Here’s an interesting quote from the comments: “I’m an agent in a high end neighbourhood in North Surrey where 90% of buyers are Chinese. In a typical month over the last year there were 40 to 45 sales. In the last 30 days there have been just 6 sales. Are the prices coming down? Well, yes and no. During the boom asking prices were almost always artificially low to attract multiple bids. You would list a home for 900k or 1 million and it would sell for 1.1 or 1.2 million. Now homeowners are listing for closer to where the actual market range is knowing there likely won’t be multiple offers. Compared to the low list prices of before prices are still up. Compared to the old sale prices then prices are down.” Btw the article is also very interesting,… Read more »
vangrl
Member
vangrl

Agent makes no sense. He’s looking at listing prices to give an answer on selling prices. Just tell us what they are selling for.

No Money Down
Member
No Money Down

“Compared to the old sale prices then prices are down.”

Boombust
Guest
Boombust

It;s “what’s happening” alright. Oracle? Over to you.

No Money Down
Member
No Money Down

Peter Ladner essentially nails it.

“Because we let this bubble get so big, shrinking back to a healthy real estate market more aligned with local incomes is going to be painful”

https://www.biv.com/living-working/#exploring

Boombust
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Boombust

Hey, just open a telephone book at random in Tokyo and they’ll tell you it can happen, alright.

Oracle
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Oracle

in a place with zero immigration and declining population.

Sure it WILL, not just “can happen”.

Boombust
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Boombust

Okay then, Open a phone book in Dublin , Miami or Phoenix.
“Hello? You don’t know me, but…”

Oracle
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Oracle

Its_the_ALR_stupid:

You see my predicament? I try to point out to the bears what you just pointed out and i get labelled a “pumper” of RE.

IMO, if you are looking to buy. Buy before April if you think the Liberals are going to win. If you think the NDP are going to win, then next August might be a good time to buy. If you don’t have enough money, then i suggest buy a condo in the city and a detached further out in the valley as insurance. I know a lot of people that have done that, thereby pushing Abby detached prices into the $650K range.

Boombust
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Boombust

Great. Now they can buy that coveted Spanish Magic bedroom set and the avocado washer and dryer combo at a nearby garage sale. They probably won’t have much left over for anything else.

Boombust
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Boombust

Stupid is as stupid does, I suppose.

Its_the_ALR_stupid
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Its_the_ALR_stupid

As I mentioned earlier, my plan is to look at MOI (and its direction) and make my buying decisions accordingly.

But that’s IF I decide to buy at all. I’m also thinking of leaving the city entirely. Like most posters here I am not happy with the high prices in this city, especially for detached houses. I am pretty sure I could just “buy the dip” and make a fortune when prices go up again, but being old school I kind of despise unearned wealth and would prefer to live in a city where people have a moral preference for making money by creating things, not by sitting in a house doing nothing. I don’t want to be a part of that.