LGS at yattermatters 4 May 2011 9:40am – “All of the talk of Vancouver being unaffordable and that prices are “crazy” reminds me of the many articles that I have kept as a real hobbyist… The articles are almost verbatim over time regarding Westside Vancouver – ie people thought it was incomprehensible when a 33′ Dunbar property reached $500k, then again at $1M, then $2M…. the only thing that has changed in reading old newspaper articles is the $ figure…. but rest assured, when prices stabilize, go down about 10%, then rally again, the next uptick in prices in Westside Vancouver will be higher than they are today. Simple supply and demand… and to quote a famous line…”they ‘aint making any more land” As a born and raised Vancouverite, the type of buyer (ie no longer a working class neighborhood) has simply changed. For better or for worse – depending if you already own Westside Vancouver RE, prices will go up over time…and if you do move from Kerrisdale or anywhere else out of the Westside…you will never be able to come back in terms of price. Things have always been and will always be relative to the Westside – Further even if the market tanks short term and your Westside property loses value on paper, rest assured as well – you will still be able to buy exponentially more as you move out of the Westside and into other Greater Vancouver areas…”
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- James on “I had a work colleague approach me today to ask about buying a condo in New West. She had no idea about the economics of ownership and real estate.”
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- ex-kitsie on “The bank encouraged her to take the equity in her home to purchase another home. She bought a 2nd home at the peak.”
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Latest Anecdotes:
- “The bank encouraged her to take the equity in her home to purchase another home. She bought a 2nd home at the peak.”
- “Let’s remember how we got here” – Looser and Looser CMHC Limits
- Don’t Worry, I’m Sure Somebody Will Sort This All Out – “Policymakers now know better and will be a lot more proactive in preventing a collapse.”
- “Things have changed, we are not doing that type of mortgage. We are not interested at all.”
- “We are noticing our target type of housing in price decline, albeit slow, as our money increases in value, slowly as well but outpacing housing.”
- Renter Buys In West Van – “For a few hundred more per month, you could own the place. Which is what I will be doing as my offer for a place down the street has been accepted. There is some value in staying in one place.”
- A Bed in the Bathroom, Why Not? [Let Us Count The Reasons...]
- “My husband and kids are pretty happy in our rental house within cycling distance of work that we could never have afforded otherwise. We’re doin’ pretty dang well, thank you, for median income earners in this expensive city.”
- “I Wish Them Bad Luck.” – Jim Flaherty, on those who wish to profit from Canadian RE price drops
- “We asked why he doesn’t just rent the whole house. He said he can’t, it wouldn’t cover his mortgage – he’ll get more to rent it out as two suites. These new landlords are hilarious, thinking that rent will cover their mortgage!”
- “My neighbours, in their late 60s, just put their house on the market. They had said they would die in that house, but now they are worried that with the housing market going south they may be losing a lot of equity and they better sell now before it gets worse.”
- Chat Thread
- Taking A Break
- “My best guess: this property is now an ‘investment hold’ and will be built ‘when prices recover’. Good luck on that!”
- Man Loses $745,000 Vancouver Condo Deposit
- Graphic – Degrees of Housing Overvaluation in Canada
- The Rare Individual With A Negative Ownership Premium
- Advice Regarding Renting In Vancouver, Please – “Unfortunately, the Vancouver rental stock is absolutely atrocious. It just seems like every landlord is looking for someone to pay 100% of their mortgage on a crappy place through rental income.”
- “I just visited Manhattan for a week, and happened to snap some real estate ads on both the Upper West and Upper East sides of the island. Compare to Vancouver. It simply doesn’t compute.”
- Ben Rabidoux In Vancouver Next Week
- “The mortgage company told me they were calling in my 40-year, 0-down mortgage. I have paid nearly sixty thousand dollars towards it, but, nearly five years in, I have yet to touch the principal.”
- ‘Vancouver City Hall: Housing Report Card 2012′; Plus Revised Version
- “My folks find themselves at 65 still owing half the value of their home and recreation property to the bank. After almost 30 years of ownership in the BPOE and a number of boom markets, they have very little to show for it.”
- “Rent for $2,200 a month or buy and have a mortgage of $4,310 per month. Why would anyone buy?”
- “They were talking about two couples they knew who had recently bought a lot and planned to each build a house on it and live as neighbours.”
- Greater Vancouver Home Builders’ Association Annual First-Time Buyer Seminar Attendance Plummets
- Mom and Pop Get It Wrong In All Markets, Time And Again
- The average British Columbian homeowner is not going to pay off their mortgage by the time they retire.
- “He’s sold all his properties except his current one, which is now for sale. He explained that the market’s currently in crash mode, worst that he’s ever seen.”
- “One of my old high school buddies finally got her mother to sell the family home in Kitsilano – sold for over $1M, monies realized after debt paid off $185K.”
- “I know someone who just declared bankruptcy because her condo was assessed at $150k and she bought it presale north of $250k in 2005 or 2006.”
- Sturdy, With Views – “Calling Froogle Scott!… Is Dr. Scott ‘In The House’?” [Not In This One, Certainly]
- “She said the market was dead in Victoria and that it would remain so for a very long time. I asked how she knew. Her answer was fascinating and should scare the pants off the real estate crowd.”
- Kits Notes – “I’m pretty sure that this is the first 3+ bedroom property of any type that I’ve seen in the 5 years I’ve lived here that is priced below $700K.”
- “A beautiful Belfast home, in the equivalent of 1st Shaughnessy, bought at their RE peak in 2007 for £3.5 million, has now sold for £800K, almost 80%-off. The market didn’t suffer any significant economic shocks. Rates & unemployment didn’t skyrocket. They didn’t build more land. Sentiment just changed and the prices fell and fell.”
- “Two family members of hers are trapped, underwater, in condos on the East Side.”
- “Interprovincial migration is not saying good things about BC’s economy.”
- Vancouver RE: Not As Expensive Provided You Don’t Think – “It’s clear that our perception of affordability has been coloured by living on a continent where housing is unusually inexpensive.”
- More Undisclosed RE Industry Insiders Publicized As Clients – “In 1995, Allan and Karin Hoegg were mortgage-free. But no more. Today their Vancouver home is a valuable source of income as they plan for full retirement.”
- Rumor that some OV units will be reduced by 20%.
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Thanks for giving an example of what an idiot looks like.
He convieniently forgets to mention the gut wrenching corrections that destroyed many speculators in those hey days.
Timing is key of course.
We are all speculators……roll the dice already.
There’s unaffordable and then there’s unaffordable. Same old arguments, carefully hidden.
Simple supply and demand…
Not so simple, when speculation enters the picture. Demand is now driven by the perception of demand.
Agreed.
Vancouver RE bulls have for years waved away talk of fundamentals and pointed at ‘demand’ as a reason for ongoing price climbs.
Speculative ‘demand’ is ephemeral; it only exists because prices are rising, and it can/will disappear in an instant.
don’t forget the misperception of value created by rising nominal prices due to inflation.
it’s sort of like the BC Liberals calling themselves Liberals
We need an upfist function.
i don’t think you could show sufficiently graphic resolution on the icon button for it to be as funny as it ought to be.
this article is right on the money so I’m surprised you posted it vreaa
unsuccessful troll, troll
Hey rusty, if you’re so unhappy about the articles published here, or think there are so many enlightening RE bull arguments that aren’t being recognized here, why don’t you start your own blog? My guesses are:
1. You are far too lazy to do so
2. There wouldn’t be enough material
3. You obviously have a vested interest in overinflated RE and think by continually repeating the same foundationless bull rhetoric here, you have a chance of swaying a bear mind or two into joining the mass hysteria, and hope against hope that this bubble’s surface tension extends just a bit tighter.
I suggest you stop wasting your time, start looking for a real job, and divest yourself of RE holdings in the near future.
What gets me on the whole Real Estate front, and it doesn’t matter if it’s bulls or bears, is that many seem to be only looking at Real Estate and base their opinion on what will happen on that. The bigger economic picture (especially on a global level) never seems to come to mind.
Garth Turner is a good example for this. He does make valid arguments as to why he thinks the prices will come down here in Canada. But where he fails is to even remotely consider that RE bubbles are just a symptom of a much much bigger problem we are about to face.
This is most clear when he talks about US real estate which in his opinion now is “undervalued” in many markets and he suggest to invest there.
I am not sure what to make of this, outside of getting the feeling that even the RE bears really do not understand what road lies ahead and just how ugly things could become.
Guess time will tell us.
“Gentlemen, there is a hint of WEIMAR in the air.” – Gore Vidal – 1999? 2003? emphasis mine
Michael -> Bears who have funds outside of RE are likely to be looking harder at big-picture stuff than most locals.
和 -> Hyperinflation is by no means a given.
For just one take on other possibilities, consider this opinion from Charles Hugh Smith, where he asks: “Who wins with hyperinflation? Who loses?”
http://www.oftwominds.com/blogoct10/grand-strategy10-10.html
Note: We are not suggesting that this scenario will necessarily play out, but we do question the ‘inevitability’ of hyperinflation that we see suggested in some quarters.
i just entertain the hyperinflation option as the death knell of (most?) fiat currencies, as they all die, just like all democracies (and all tyrannies) and even all of us, die.
die die die housing bubble.
You don’t need hyperinflation to lose big in the US. Japan has been a big buyer of US bonds, with their economy now in a double dip (officially) and the cost for the Earthquake and Fukushima not even tallied yet the odds of them buying any more bonds is pretty slim to none. They may even have to get rid of what they are currently holding.
Likewise China. They do not need to go to war with the US, they can bankrupt them with the press off a button and there is little the US can do. The only reason why they still limber along is because they are “too big to fail”, but the Chinese could just as well conclude that it isn’t worth their time anymore and they just pull the plug. Hey, they have all the factories. If the US goes *boom* and pulls the rest of the world with it down the drain China will still be laughing in the end.
How likely are those scenarios? Who knows, Japan I think is a given, they are with one foot already over the cliff. China…. Well, they have internal problems, but it wouldn’t be the first time that someone externalizes their internal problems to keep the “peace” at home.
Changes happen in chaotic periods:
Stable –> Change / Chaos –> Stable.
Right now we’re at the beginning of Chaos. Who knows what the new stable will look like, but I would say it won’t include Western or US dominance.
I agree that Garth can be a bit narrow, but I also agree that the U.S. is a buy. Even if prices go down more, if you are an American you can lock-in (for 30 amazing years) a historically ridiculous interest rate, if you are Canadian, you are leveraging your historically ridiculous exchange rate. These two factors mitigate the risk of prices declining more. IMHO. YMMV.
Why would I buy in a country that has severe debt problems, a moribund industry and continues to be involved in two wars that eat up a huge part of the GDP with no sign of this ending?
Add to this that China will challenge the US for world dominance militarily soon as well (heck, they just build their first stealth fighter) and then take a look on how the Soviet Union ended and I cannot really get a warm and fuzzy feeling to invest anywhere in the US at a moment if I cannot be sure I can just take my money when I want to and walk.
The same reason that Garth gives why you shouldn’t have all your retirement plans set on your house price (it’s not a liquid asset) applies equally in the US. As energy prices rise and society in the US re-organizes many “great buys” will be just as bad an investment as buying a crack shack in Vancouver right now.
But hey, that’s my reading of the situation, there will be deals to be had and money to be made, but the risk assessment on my part had me conclude that the potential payout isn’t worth the risk associated with it.
Wait, are you comparing the Soviet Union to the U.S. or to China? The comparison of increasingly obscene amounts of state money being used to prop up increasingly unproductive fixed asset investment is right out of the Soviet history books. Also matches the breathless business news headlines in the West regarding it too.
My assessment of the U.S. housing market was only with regard to price. As an investor you bring your own perspective, obviously. But with regard to debt, you may want to add up the Canadian provincial and national debt and compare that to GDP before you shop for your next house in Canada, if that is an important a metric for you.
The US.
Since the end of the cold war several researchers have dug into the Kremel and KGB archives and essentially concluded that the SU failed because the US forced them into spending on military and MAD instead of the programs they wanted to.
The cold war essentially bankrupted the SU.
Oh China is spending like mad too, but they have a few advantages over the US, not in the least a huge pile of US debt, are the worlds factory (more or less) etc. Eventually they can’t continue doing what they are doing, but this has gotten into a contest on who can hold their breath longer and the US has been at it quite a bit longer than China.
If I would buy a house in Canada it would be as a home, not as an investment, as such this would be of secondary importance to me.
Any property I would buy as an investment would be one I won’t live in and it would need to be cashflow positive from day one. That would most likely involve an MDU, but really, I see little appeal in buying / investing in real estate in the foreseeable future either in Canada or the US (or UK, Japan, China, Australia [insert country]) for that matter.
”they ‘aint making any more land”
The most idiotic, annoying, stupid “argument” from bull’s arsenal.
a 50 year old waitress i know used to espouse this view as her dead father’s advice – they’ve done well with their property, apparently – but notably sold about a year or two ago and downsized to a trailer.
shoeshine boy moment?