When it comes to deducing what mainstream commentators really think about the Vancouver real estate market, television clips and radio interviews can be far more telling than newspaper articles. The carefully phrased, edited, and re-edited written word, doesn’t reveal as much as the verbal nuances, body-language, facial expression, and less censored content that often emerges in interview. Frances Bula is a contributor to The Globe & Mail, a city columnist for Vancouver Magazine, and a blogger with focus on city affairs (‘State of Vancouver’). We are unaware of her writing anything, anywhere, that explicitly identifies a RE speculation problem broadly amongst Vancouverites. Here, however, she identifies such a problem, in a radio interview:
Frances Bula: “Yeah, I mean, one of the things I’ve always found fascinating about this project is that in a way it’s symbolic of Vancouver and all of us… uhm, you know, this is a city that in a way we’ve built our economy and many of us have built our personal lives, in a way, on speculating on real estate… even our own houses, we pay crazy prices for them, in the expectation that prices are going to rise, not because our incomes can in any way cover them [laughing, and laughter from others] so we have a whole city that’s kinda gotten caught up in this because really what happened there [at the Olympic Village] is that everyone thought the real estate market would just keep going up and up, that the market could bear all the different things they were doing… making it green, building beautiful things around it, and so on, and, we were all caught out.” – CBC Radio, ‘The Early Edition’, 17 Feb 2011, interview with Kathryn Gretsinger, about the Olympic Village sales plan.
Almost every Vancouver RE purchase has a speculative component, even if it is most often coated in a veneer of wholesome innocence. The willingness of locals to borrow vast sums of money, and to use that money to bid up RE prices, has driven our bubble. As Bula implies (and as we have long argued) stratospheric prices would not have been paid by people who didn’t expect ongoing limitless price appreciation. This speculation, by all buyers, is a far, far more important engine to our bubble than other commonly touted phenomena, such as, for instance, foreign money.
See the ‘Spot The Speculator’ sidebar category for numerous relevant examples.
Q: What happens to speculative demand when prices start dropping?
A: It evaporates.
Q: What happens to speculative holdings when prices start dropping?
A: They become supply.
Thanks to Froogle Scott for alerting us to this clip. As Froogle writes, via e-mail: “Frances Bula sounds like she harbours quite a bit of bearish sentiment, and doesn’t exclude herself from what has gone on with Van RE. And given her professional background, she’s obviously someone who’s very knowledgeable about Vancouver, past and present. A member of the MSM who isn’t willing to be a purveyor of the Kool-Aid?”
Those of you who don’t yet know Froogle’s own story, take a look here.