A lady at a pre-sale promotion for the development ‘Yaletown Park’, in 2004, uttered words that are now immortalized as representative of the Vancouver RE bubble: “I buy three, and my husband gonna buy three.”
[Thanks to hatsujoki for extracting the clip from Greenhorn's full context clip here. And thanks to discussants at vancouvercondo.info for initiating the search for this gem. -vreaa]
This should be Vancouver’s slogan!
Interesting choice of video – if she bought in 2004, I’m guessing that she’s going to be alright even if she decides to lighten the load today.
This highlights the problem with the bear’s argument… Timing actually counts for something.
i wouldnt’ feel sorry for her. she bought in 04 and made several hundred of thousand of dollars. i would feel more sorry for the bears that could’ve bought in 04 and DIDNT!
Tim,
Of course timing counts. Buy low sell high, its not hard. What bears say timing doesnt matter? Arent bears saying to wait for a better time to buy?
Genxr:
I doubt her and her hubby actually completed on all 6 of em, or any at all. Regardless, she probably did well.
The point isnt that she is going to lose money (today I think she would), the point is to show the total excess of the boom years. No one needs 6 condos, this is pure speculation.
davers,
I’d say that pulling out such a clip from 2004 is proof enough that bears are saying that timing doesn’t matter.
I’ve been arguing the point that we (bears) need to be more critical of our analysis for about 4 years, and all that comes back is, “we only need to be right once.” as if there was a fundamental value on the price of real estate. Whether there are fundamentals or not, it’s possible the market can be *off* fundamentals for decades – even a lifetime.
I really cant comment on 2004. I have only had a legitimate option to buy RE for 2 years (the same amount of time I have had my current job). Before summer 2008 I had no idea RE was so highly priced, and I really didnt care because I couldnt buy it anyway. Its tough for a student to get a mortgage.
Still, if you treat RE as an investment then in order to make money, you need to buy and/or sell at the right time. This lady bought in 2004, when (I think) prices were above fundamentals. However, if she sold, then she sold at a time when prices were even higher above fundamentals, so she did well.
But if you buy at the right time (prices below fundamentals) then it is more likely that you will be able to sell for a profit. The closer you get to the peak, the smaller the window you have to sell and make a profit. If you can buy at the bottom, no matter when you sell you will make a profit unless a bigger bottom is reached later.
@Tim – but if everyone who bought in 2004 sold and did not sink the profits back into real estate, we wouldn’t be still at price highs today.
Frankly, if you’re optimizing for a given individual when considering the market, than some will get lucky by buying in and getting out at the best times – but the vast majority will follow the market up and then down again. In the aggregate, it doesn’t matter – no real wealth is being created, only credit extended, sucking wealth from the future. It’s like a game of musical chairs, only the music plays for a very long time, and when the music stops, 85% of the seats have been pulled. Sure, someone’s going to make a killing. And many are going to lose. Of course the music might play for a decade (and I think the average is seven years up and down, although I can’t remember the paper I read that in).
@Absinthe
I largely agree. What I don’t agree (not necessarily with you, but with the bulk of the folks on vancouvercondo) is this that the pulling out of chairs is unquestionaby imminent nor that it’s 85% of chairs getting yanked at once, or that some chairs won’t be added back at a later time. It is my hope that this scenario plays out as you describe, but hope seldom meets reality.
Well, it may not be imminent, that is true – it does look like it’s turning now. It is imminent enough for those who look at the game and not the player; do you see what I mean? Eventually the pyramid will collapse to a small number of winners and a larger number of losers.
As for 85% of chairs being yanked ‘at once’, I have to ask what do you mean? The average is seven years up and down. To me, that’s sticky compared to stocks, but it’s the length of time it takes all the players to sit down again. That’s what happens when the music stops.
In the end, RE doesn’t manufacture lots of extra wealth (densification and zoning, yeah, but a SFH is a SFH and rents are tied to incomes.) Paper gains are paper gains. So in the end, words like “imminent” and “all at once” are a matter of perspective. If you’re interested in shelter and not in investment, they only matter in regards to when you get in.