“I am so pissed, I cannot put my thoughts into words.” – Bob Rennie, Vancouver condo marketer, on the marketing uncertainty generated by Premier Gordon Campbell’s announcement this week that the HST would go to a referendum on Sept. 24, 2011 [Globe and Mail, 16 Sep 2010].
Remember when Bob Rennie was un-pissed enough to put his thoughts into these words: “EVERYTHING IS GOING TO BE ALRIGHT” ? That was back in Sept 2009 when markets were storming back and Vancouver RE looked bullet-proof:
Rennie is trying to sell lots of condos, including >400 in the Olympic Village, in the face of a stalling RE market.
When bubbles burst, people re-write history; they retrospectively come up with ’causes’ for an implosion. They do this because it’s far easier for them to tell themselves that something extraneous, something unpredictable, caused a crash, rather than to admit that they were foolish enough to not recognize a classic and irrational market bubble that had been staring them in the face for years. They’d rather see themselves as surprised than gullible. (And, even better, indignantly blame somebody else at the same time.) Witness locals who now preach that our housing price drop in 2008-2009 was caused by the Sept-Nov 2008 global economic meltdown. [It wasn't - The Vancouver housing market topped in the summer of 2008, months BEFORE the financial meltdown. Perversely, the global free-money emergency financial bailout RESCUED our RE market... Temporarily, anyway.]
Bubbles don’t need ANYTHING to pop them, they eventually, always, inevitably, collapse under their own weight, as ours is now proceeding to do. Like forest fires, they roar deliriously, then run out of fuel.
The HST is serving as a very convenient scapegoat for current poor sales, and it’s a fair bet that it’ll be pointed to in future as something that brought down the market. But in the grand scheme of things it’s essentially irrelevant. The real problem for this debt-fueled speculative-bubble market is in its very fabric, and that flaw is way, way bigger than the HST.
“The HST is serving as a very convenient scapegoat for current poor sales”
If anything it would have the oposite effect of ‘killing real estate’ because it would encourage people to go to the resale market instead of pre-build and this would cut down on speculation and reduce inventory.
Debt kills.
Watching HGTV tonight and was horrified at a young couple getting lumbered into huge mortgages for these Ricky tack palaces, and the whole tenor of the show is that this is “normal”.
It is NOT normal to pay 70% of your net on your roof – sooner or later, things go POP.
Well, pardoner, things blew up here, as correctly noted, back in 2008.
My gut tells me that there are a whack of folks in Vancouver that are secretly getting squeezed by huge HELOCS and falling values. Soon the bank will call and ask for a refi on some of these over priced dumps and the jig will be up.
So many people got juiced on this era of ZIRP, that now they need to feed their jones and the dealer is going to cut the supply of cheap credit = d oo m.
Good post VREAA. Prior to the HST many Re pumpers said it would have no effect.
Some of us Bears did say it would be another weight on the scales as it added another expense but no one thought it was significant. Still don’t.
I feel bad for Rennie. I really do.
I have a friend living in the Olympic Ghetto (as he calls it). He enjoys the fitness room always being completely empty.
“I feel bad for Rennie. I really do.”
While I don’t feel bad for him — he’s not hurting for quality of life — I certainly would be “pissed” if I were him. But he should know very well how Campbell runs his ship.
Pissed? Sure. Surprised? He shouldn’t be in the slightest.