Excerpts from an article in the Vancouver Sun, 28 Oct 2011, by Ozzie Jurock, publisher of the Jurock Real Estate Insider. The Sun comment section was closed for this piece.
“In 1960, … your home sold for an average price of $13,105. Yes! By 1970 we reached $24,000, by 1980 we clocked in at $100,000, by 1990 $230,000 and by 2000 $296,000. In the last 11 years we rocketed from there to where we now are at $1.1 million (average used home sale price between Lions Bay and Mission).
…
We have had massive inflation in housing prices, driven by excess, cheap easily available money and today we are doing more – much more – of the same.
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Real estate remains cyclical. I have told my subscribers to expect a downturn in the Interior and Vancouver Island over a year ago and a slowdown in Vancouver, too. But, I remain convinced that the naysayers will be wrong again. Yes, the numbers are bigger, the zeros larger and yet each time – after climbing a wall of worry – we muddle through with the result that hard assets will be even higher five to 10 years later.
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House hunting is a little like duck hunting. When duck hunting one has to lead the duck. You have to shoot ahead to allow for the distance the duck is going to fly while your shotgun pellets are getting to him.
If you don’t you’ll always be shooting where the duck was, not where the duck is. Same thing with the real estate market. It is always changing. You have to know what’s happening with the aspects involved in your potential purchase and the management of your existing property portfolio.”
Agree regarding the importance of doing your best to anticipate the market.
Does the “management of your existing property portfolio” ever involve selling? – vreaa
“earnings don’t matter”
You’ve been telt.
earnings matter from a purely investment standpoint, which homes to live in are not.
In typical times, homes are “to live in”.
Here, and now, they have become far more than that.
And therein lies the problem.
if an investment, earnings matter. if not an investment, cost still matters.
It’s a new paradigm…..
“Does the ‘management of your existing property portfolio’ ever involve selling? “
That’s what’s been so perverse about recent purchases, there is an assumption that 1) prices will increase (recently I was shocked at how prevalent this thought is) eventually (supposedly validated by the rebound from 2008 bear market blamed on GFC shock; remember Muir’s comments on this), and 2) the housing market is liquid. These days i see people stating these things because they want them to be true, but have little control over whether or not they are even plausible let alone possible.
Can markets be driven by perpetual wilful blindness? We shall see!
“there is an assumption that prices will increase (recently I was shocked at how prevalent this thought is)”
They’re ALL speculators..
Told you so.
Yep. My brother in law and sister in law sure are.
They know they will lose money if prices do not appreciate. They do not NOT care about losing money…. they are stretched financially just to get in the market at 0.5Million. They are speculators, even if they are buying it to live in.
I phoned them with Muir’s latest predictions, and he simply said they have pretty much bought, and that they will bet $100 with me again that the 2012 assessment for their new townhome will read higher than the 2011 assessment.
(I know assessments lag market declines so refused to bet on this measure.)
Buy and hold. They tried it for stocks, and when that bubble popped they changed the asset class, not the strategy. So why would it work now? Well, maybe the government will damage the financial system enough that you can’t tell whether or not it worked.
Here’s an interesting story about the current deranged state of the construction industry:
My brother, who has zero experience in construction, answered a craigslist ad for a roofer position at a large roofing company. They offered it to him after a brief interview, 15 bucks an hour. He started work and was ‘trained’ by a crack addicted employee. The crack head, actually asked to borrow money from him for supplies, which turned out to be a lie for drugs – he obliged and offered up $200 – which he never saw again. My brother confronted his boss after the crack head went awol for a week. The boss had the keys to his apartment (the crack head was staying at an apartment of his) and offered him to go in and take whatever he wanted ! My brother quit shortly after.
If this is the quality of the people who are in the industry now, I can only wonder the quality of the output….crazy.
how u know it was crack? Likely smack, given the guy was a roofer. Don’t ask how I know.
LOL. When I was younger I did roofing for an outfit in Alberta and they had strict standards:
- sneak off to a local pub at lunch for a quick beer if you’re going to drink on the job. Or a one beer limit on the roof, but pound it so the customer doesn’t see
- smoke weed in the company truck but never ever on the roof. That would be unprofessional
- if it goes up nose I don’t want to know about it, but you’d better share
– if you’re working on the road don’t bring hookers back to the motel room you’re sharing with your fellow roofer. That’s what parking lots are for.
- be nice to the new guy. He just got out of prison, and oh by the way – can he stay with you for a while until he gets on his feet?
- all fights are to be done on the ground away from the kettle. And don’t throw hot tar at your enemy/co-worker no matter how much you want to kill him
Good times!
Lol the telltale sign for dopefiend is sweating and disappearing for 5-10min unannounced. Usually it’s weed but heroin sometimes.
Crackheads or meth users usually don’t do roofing, they more often than not end up nailing their feet to the plywood.
“Crackheads or meth users usually don’t do roofing, they more often than not end up nailing their feet to the plywood.”
Ha ha ha ha ha! That reminds me of a crew I worked with in San Diego 10 years ago. We were renovating a crazy expensive house on Coronado Island ($$$) and I was the only non-alcoholic, non-tweaker on the whole site. Even my boss would show up drunk, pulling into the driveway at 10ish with a beer between his legs. Foreman (on prison work release program) with a meth pipe in the attic and framer (wanted on outstanding warrants) hiding beers in the CUSTOMER’S FRIDGE!
So the customer (God bless her) is giving my boss hell one morning when the drunk ass framer knocks over a half-full beer he had forgotten about the day before and stale beer pours all over my bosses head – in front of the customer. Believe or not we did not get fired that day.
I’d even go down to Tijuana with my old boss so he could pick up prescription drugs that he was addicted to from the Farmacia because US docs wouldn’t hook him up. The way it works is you go into the pharmacy with an old prescription bottle and give it to a “doctor” (guy with a white coat) who then goes to the back room and opens up enough drug samples (shipped into Mexico by US drug companies) to fill your bottle and away you go! Cheap, easy and totally illegal. So when we headed back over the San Ysidro border crossing the boss man would be sweating bullets and buy some stupid trinket like a wooden giraffe and pretend that THAT was the reason we headed down to Mexico for an hour. And then we’d head back to the job.
That guy I worked for is dead now (drug overdose) and the framer got picked up drunk driving through a speed trap and thrown back in prison, then got out, then got shot.
Another trend I’m noticing is what I would characterize as “acclimatization”, the thought that high prices are the norm. I’ve found myself under a sense of malaise and ennui discussing RE, the same old tired platitudes and flawed logic, the same old rebuttals; I see the entire conversation iunfold n my mind before the first exchange completes.
It’s to the point where I could care less if a friend buys now than I did say 2-3 years ago even though I should be caring MORE now than ever. But this is the way of things; in my real life life my bearishness has been relegated to the bottom drawer of my wardrobe. I have capitulated, in my own way.
Based on that alone, I’m calling the top. Devil’s night, the 2011th Year of Our Lord.
Interesting.
For me it’s been cyclical… at times in my real-life personal life, i’ve been fairly animated in discussing RE, at other times not… through the last 6 months I’ve been in the ‘ennui’ space you describe.. Perhaps the sign of a top, but, then, I’ve experienced similar periods like this earlier in the mania.
But, speaking more broadly, the preponderance of the ‘acclimatization’ you describe is, we’d think, very real. More people are exhausted/resigned.
This “acclimatization” is what lead me to my top call. I believe that its actually true capitulation. Combined with the stories of locals leaving, and resigning to high prices forever. This is what capitulation looks like on a market wide scale.
Ditto on not caring any more. I am officially RE burned out. Focusing on work and paying off my humble size mortgage in paradise.
I too have been thinking along these lines for the past month or two. I have been increasingly of the opinion that things may never correct here to the massive scale I think they should in order for prices to be remotely reasonable. I too have wondered if my own internal capitulation is a sign of a top. Not that this internal capitulation will ever lead me to buy in this market, but I guess I might eventually rent a nicer place so I can change my first name on this board
. Sign of a top? I frankly doubt it. But maybe that’s all the more a sign of a top.
Well you all know how I feel about the state of Van RE these days.
Interesting article about China’s problem…sounds like what’s happening in BC, but in a far far larger scale:
“Ah, real estate. Just as it took down the American economy, now it has the potential to do the same for our friends across the Pacific. Bearish observers single out the twin trends of easy credit and rampant overbuilding — sound familiar? — that have led to “ghost cities,” a blizzard of new developments and skyscrapers that have been erected and now lie virtually empty.
Surely that can’t be sustainable. Some Chinese officials have talked smugly about having abolished the usual business cycle of boom and bust, after 30 years of impressive growth. But no country is immune to economic troubles, and sooner or later, China’s engine will start to sputter.”
http://business.financialpost.com/2011/10/31/3-ways-to-invest-in-china-without-fear/
So diablo wins?
Ozzie Jurock is in the business of making money on real estate whether it goes up or down. He profits either way and sings a different tune when things change. His comments are so generalized that he makes himself sound “right” all the time. Ask Ozzie about his lawsuit and his recommendations in Alberta. He was busy telling people to buy in Alberta at the height and the real estate there dropped causing a lot of investors to lose their shirts. He is an amazing marketer cashing in on the past boom in real estate and has helped many lose a lot of money.