- cover, Canadian Business, Jan 2012, for the record. [hat-tip 'J']
Featured article ‘Prediction: The Canadian housing market will crash’, by Joe Castaldo, 12 Jan 2012, was recently discussed on these pages [VREAA 21 Jan 2012].
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- 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.”
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- “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%.
- Downside Weights On The Vancouver RE Market – “One of the older guys (over 60) mention to the guy beside him that he and his wife were thinking about selling their family home, and renting, in order to get some of the money that was locked up in the house.”
- “My buddy was looking to upgrade to a house in the Coquitlam area. With 200k extra for a home, that’s half of lifetime saving between him and his wife.”
- “I was walking in the Fraser neighborhood yesterday, I noticed that the population, on average, seem to be composed of workers. I belong to the top 5 percent in terms of income. Nevertheless, I cannot afford any of the houses for sale in that neighbourhood.”
- “Vancouver is an urban resort whose value mostly resides in its real estate and not much else.”
- “Rogers Communications is expanding into RE; aiming to relaunch website; providing critical data that can help potential buyers assess the value of a property from the comfort of their home computer.”
- I’m only 50 and I can just about retire if I want to, all because of a single simple decision – “When prices rebounded to their former highs, then rocketed another 30% higher to what I considered to be totally unsustainable levels, I decided that only a fool would pass up a second opportunity to harvest such a massive non-taxable capital gain, and in 2011 I sold my place.”
- The Vacant Lot of Versailles, Richmond.
- “I don’t think that most people think things are going to crash, just that there is going to be a slight correction, but it was amazing to me how sentiment has changed, and the fact Vancouver RE is too high was just understood.”
- “The ‘investor’ who purchased our house put it up for sale two months later, in January 1981, but the bubble had burst.”
- For A City To Have That Kind Of Vacancy, It’s Like Cancer – “Downtown, the vacant unit rate is so high that it’s as though there were 35 towers at 20 storeys apiece – all empty.”
- “What’s the worst that can happen? You can’t pay your mortgage, so sell your house! No fear.”
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Now I’m wondering if the bubble won’t keep inflating. I read this article last week, but wasn’t expecting to see it on the cover. Usually when a major publication tries to call an end to the boom with a big cover story, it means the boom still has some legs. Normally the crash happens only when EVERYONE in the major financial press has given up calling for it.
I recall a similar cover on Time Magazine in 1998 at the height of the Asian crisis. Something like, “Are the Good Times Over”? Of course the stock market and the US economy kept roaring ahead for another 2 years, finally crashing in 2000-01.
Who knows? Could be the writing is already on the wall, and these guys are just pointing it out.
The magazine cover indicator, seems to date from, or be most famous for, the ‘Death of Equities’ Business Week cover in August 1979.
It doesn’t seem to hold much water for local RE (witness the Classic top-of-the-market Georgia Straight cover down near the bottom of the right hand sidebar).
perma-bear Joe Castaldo. If you listened to Joe back in 2010 when he warned you away from real estate you’d have missed out on 30-35% appreciation.
“Why buying a house may be a bad investment
Georgetown Real Estate
By Joe Castaldo, Canadian Business Online
Monday, March 15, 2010 provided by Canadian Business”
http://www.georgetownon.ca/index.php/real-estate/georgetown-real-estate/442-why-buying-a-house-may-be-a-bad-investment
haha, “back in 2010″, as if that was ages ago! Anyone who thinks 30-35% appreciation over one or two years is at all normal, or sustainable, is truly fooling themselves.
What’s the problem?
Joe was correct in 2010 and he’s still correct now, in 2012.
A bubble can only deflate once. When you’re in it, you can be sure it’s present, but you can’t be sure when it’ll eventually pop.
Only in bubblicious Vancouver F1. By the way, Castaldo is a journalist and simply reports others’ opinions. It appears that you regard anyone who has a bearish view on RE as a perma-bear because of your own small narrow-minded experience. At least Canadian Business provides predictions with well discussed rationale. You on the other hand, are great at “predicting” what happened over the past 10 years which is completely useless.
That 30 – 35% appreciation means what exactly? To realize it one needs to sell the home first. If that is your residence then you need to buy another home that has risen by the same percentage. Home equity is phony wealth.
As for house-flippers, just ask our neighbors to the south how well off house-flippers are these days.
Or you can sell and rent for a while, or downsize for a few years. Buyers are encouraged to buy early and often, trading up the “property ladder.” This would be the equivalent of what’s called “pyramiding” in other investments, except that RE transaction costs are so high that it serves to enrich RE and mortgage brokers in this case.
i think the majority who own don’t care about appreciation whatsoever. A 35% appreciation just increases property taxes right? The only loser in that case is someone not in the market, as the access costs have been elevated.
Finally, someone in the media with enough balls to print the truth.
someone who prints your truth
The one thing that is never known is the exact point of a bubble popping. The key issue is to identify the bubble as early as possible.
Once you identify that it is a bubble, then you must accept you are now just gambling, and the reality is that the house nearly always wins in the long run. Only 1% of people represent the house. Unfortunately if you want to gamble then as part of the 99% you will lose
Everybody wants to sell high! Trouble is by the time the bubble pops, you now just become a casualty figure, because you now become part of the flood.
Take a quick look at Vancouver property listings v sales and you can see the herd heading for the exit. Most will get slaughtered.
The bigger the bubble, the greater the number of buyers, the greater the bang, the greater the number of sellers, and the larger the falls, all fighting for the small number of buyers, many in no mood to save you.
Quite the focus on the Canadian real-estate balloon lately.
Here’s some coverage from the Economist.
http://www.economist.com/node/21546057
Thanks Nonymouse.
“However, the state has refused to use its most powerful tool. To protect business investment, the central bank has made clear that it plans to keep interest rates low. As long as money stays cheap, the balloon could get bigger—perhaps big enough to become a fully fledged bubble after all.”
Yep.