White-Hot Sentiment – “People want to get in. They want to get in bad”

Transcription and stills from ‘White-hot housing market’, The National, CBC News, 21 Jan 2011. [Hat-tip ‘ams’ at VREAA and ‘kabloona’ via e-mail; thanks. Our own comments follow.] –

“If you live in the Vancouver area, it seems like location is no problem at all. The housing market there is hotter than anywhere else. Even a million dollars might not get you the home of your dreams. Even in a city famous for eye-popping house prices, what happened on this corner this month is remarkable.”

“This is the condition it was in.”
It began when agent Nick Calogeros listed this dilapidated home  next to a park in a good neighbourhood.

The lofty asking price: $1,088,000.
“We had over two hundred people at the open house, there was a line up down the stairs, on the walk-way, and onto the sidewalk. And we had thirty offers come in on the property.  And the final sale price was $1,611,000.”

That’s a whopping $533,000 over asking [49% over ask], a new record in this neighbourhood, and for a house that will very likely be knocked down.

And it didn’t stop there.
“After the neighbour across the street found out about the price, she phoned me up and asked me to list her home”

Incredibly the woman had only owned the house for a few weeks. She paid $1,047,000 on November 2nd. She relisted and sold it on January 17th, for $1,350,000. That’s a $300,000 flip in two and a half months, and that’s without making any improvements to the home.”

Calogeros – “The supply is very low, interest rates are still low, and people want to get in.”
Interviewer – “They want to get in bad”
Calogeros – “They want to get in bad… to the market… they do.”

With the average house price here already topping one million, it again begs the question “Can prices keep defying gravity?”

“What’s likely going to happen is that, over the next several years, interest rates will go up, there will be some point where they go up relatively rapidly, and once that happens we’ll see in reality how sustainable these housing prices are.”  (David Macdonald, Canadian Centre for Policy Alternatives)

Besides an incredible backdrop, Vancouver has something else that keeps prices high, a lot of wealthy buyers from mainland China.

“They are willing to spend a lot of money, they have a lot of money, and especially in the luxury market.” – Gregory Carros (Sotheby’s International Realty)

It all adds up to a frothy start to the 2011 selling season.

Interviewer – “When is it going to stop?”
Calogeros – “Hopefully never.”
Spoken like an agent on commission who has just made a killing.

— end of transcription —

Our thoughts:

1. Knockdown for $1.6M; 49% over ask; 200 people on the sidewalk; $300K profit on a 3 month flip; wanting to get in “bad”: anybody need any more evidence this is a mania?

2. $300K in 3 months: High-profile news of great speculative profits is bad, bad news for our society. It distracts everyone from more productive activities, and it’ll demoralize prudent workers and savers. (How long does it take the average family to accumulate $300K savings?). It draws more into the speculative game, and puts even more pressure on prices. (Until, of course, it stops, and reverses.)

3. Throwing in a bit about demand from mainland China seems to be required fashion in these reports; like a crazy leap to try to explain the unexplainable with a hand-wave. The vast majority of sales are to locals; stories of wealthy foreigners cannot support this market indefinitely.

4. To give the CBC their due, they do use the word “frothy” and do ask the question “When is it going to stop?”. The most sensible phrase in the whole piece was “we’ll see in reality how sustainable these housing prices are” [David Macdonald]. We like the language, using the word “reality”, implying, of course that we have prices that are based on “fantasy”. We’d really like CBC to follow up with a piece on the implications to Vancouver if these prices are not based in “reality”.

5. The last two stills are not a visual ‘typo’. The realtor smiled for a really long time after saying that he hopes this never ends. As usual, a small minority of the population, those with vested interests, are happy with the insanity that this RE market has brought to Vancouver.

6. Style comment: Printing the price in massive font over the building in these reports is a bubble development. The implication is that the numbers are far more important than the buildings.

7. “Wanting to get in ‘bad’.” You can feel the exquisite, squirming urgency of the wannabe buyers. Like addicts, groupies,  followers.

8. We fully anticipate that lots comparable to the one that sold for $1.61M in this article, will sell for well below $500K during the coming bear market. That’s more than 70% off the recent sales price. If you think that sounds crazy, yes, at this point, maybe it does… It’s the inverse of how crazy the move to the upside has been. That’s how bubbles implode.


73 responses to “White-Hot Sentiment – “People want to get in. They want to get in bad”

  1. 500k is still expensive in the next bear market (whenever that is !!!); it should be 10k so even a teen earning training wage at M still be able to buy it. Oh, throw in Garth’s book for free.

    • ‘Fred’, we all know you’re trolling, but, for the hell of it, I’ll reply.
      Yes, 500K is still expensive and that is why prices may feasibly go to >>70% off peak: sounds bizarre, but there it is.
      Nobody is calling for CHEAP houses. Nobody is suggesting that even average wage-earners should be able to buy westside SFHs. What IS being suggested is that housing prices will return to vague vicinity of historic normal range: fundamental value (plus modest ownership premium). That’s about 50-60% off from here.
      So your ‘minimum-wage buyer’ and ’10K-lots’ stuff is straw-man argument, and simply silly.

  2. pricedoutfornow

    Good analysis of the CBC story. Real estate speculation IS a bubble and it WILL end. Strange how it continues here in Vancouver (especially the west side, I keep driving by the same houses for sale on the east) and not in the rest of the province. Friends in Kelowna are freaking out because they can’t sell that “million dollar” house they built to flip 18 months ago. So why aren’t people rushing in to buy with all the “good deals” (still overpriced, but a heck of a lot cheaper than Vancouver!) in the Okanagan? Oh…because prices are no longer going up there…and once prices stop going up, that’s it, game’s over. I no longer fret when I hear crazy stories like the CBC one, I know the average person is indebted to the max and one day this game of musical chairs will stop.

  3. anonymous coward

    “it’ll demoralize prudent workers and savers”. I speak as one of those workers and savers: you got that right.

  4. World is made up of all kinds. Yes we also need idiots to sell the garbage to. I liken this when Nortel was at $200, I had friends taking out LOC to buy shares of this pumped up pig. Think of all the so called “smart hedge funds and European banks” that bought toxic mortgages from Goldman Sachs.
    Don’t worry about the idiots, just worry about you and your well being, after all who will bail you out when you get in too deep?
    Study and make informed decisions and not emotional ones.

    • Yes, and remember that “all the so called smart hedge funds and European banks that bought toxic mortgages from Goldman Sachs” got bailed out by “guess who”. In a normal world (where markets are allowed to ebb and flow on their own) what most say here makes perfect sense.

  5. I am a saver, entrepreneur and employer providing well paid jobs in IT.
    All I can say when I see stories like this is – Fuck this city – I’m out! (soon, anyway…)

    • And the city will be the worse for that.

      For those who haven’t seen similar stories, check out those in the ‘Avoiding Vancouver’ sidebar category. The bubble is not good for this city.

    • Ive been saying that for a few years but things come up that make me stay, (2008, girls, family/friends, etc…) however this fall is really it, i swear this time Im moving. I can only hustle so much without seeing any benefits… too demoralizing.

      Please sweet jesus make it stop.
      We’re getting into Tulip Bubble territory.

  6. 4SlicesofCheese

    I could be wrong but I believe the buyers of those two properties are local, not from mainland China as the second half of the story seems to try to suggest.

    • I think they just throw a mainland China link into any of these stories, to fill the vacuum of trying to explain any of this.
      But you make an excellent point all the same: If anybody can confirm the buyers are local (95% are!), please let us know.

    • According to a reasonably reliable Realtor from RET, the “lineup down the street” wasn’t just made of those of Asian descent.

  7. and the so called “fundamental” is just a dream.

  8. Contrarian position is always a lonely side to take but research has shown that is where big money is made.Stay away from the herd. I say let the fool build his new mcansion and i’ll be glad to buy it from them at a huge discount. Its all a big casino….place yer bets.

  9. “The vast majority of sales are to locals”.

    Over what data set (location, price range, etc.) is this statistic taken? Do you have hard numbers to back it up?

    My “anecdotal” data, without hard numbers to back it up, is: for Richmond SFHs, the vast majority of sales are NOT to locals.

    This is still consistent with your claim that the vast majority of sales across the lower mainland are to locals. For example, your numbers could include condo sales which, I would imagine, are more numerous than SFH sales. And the locals are probably more active at the bottom-end than the top-end of the market.

    • Unagi Don -> good questions
      95% of total sales in recent years have been to locals.
      But, you are correct, even with that figure, certain sectors like Richmond and the westside could still be dominated by foreign buyers.
      A November 2010 market update from MacDonald Realty (headlined at VREAA here) stated “[An] analysis of Chinese buying trends showed that 78% of homes in Vancouver valued over $2 million were bought by this demographic. This trend is expected to continue as there is a 10-year backlog of investor category Chinese immigrants waiting to come to Canada”.
      It’s an ambiguous statement, however, as it’s not clear whether ‘this demographic’ refers to foreigners or local residents of Chinese origins.

    • Unagi Don-> For more on this subject see Ben Rabidoux’s article: ‘Chinese investors in Vancouver: Is the HAM story more than just hogwash?’, at Financial Insights, 25 Nov 2010.

  10. Village Whisperer

    The frantic frenzy that comes just before the bubble pops?

  11. Pingback: More thoughts on CAAMP report; RRSP use among younger generation at record lows; | Financial Insights

  12. I still think it may be the China factor because these two local buyers are buying to tear down and build for the rich Chinese immigrant market. The China money would not buy these tear downs, they want new. So only the end product is intended for this market, thus you see local buyers bidding it up so they can build and make even more money. Just about every new houses for sale on the westside is over 3 million at least.

  13. I wonder if this whole story is made up. 30% to 50% over asking at the beginning of the season – couple hundred thousand invested into a publicity stunt to jump start another year of insane price increases… hmmmm?

  14. Had enough of this city. San Jose here I come.

    Homes Prices
    SJ: http://tinyurl.com/25mvzb6
    V: http://tinyurl.com/2ccfags
    + Mortgage interest is tax deductible in US.

    Avg. Incomes:
    SJ: 77.6K
    V: 66.3K

    SJ: Stanford, Berkeley
    V: UBC, SFU

    Eng Companies:
    SJ: Microsoft, Apple, Google, Intel, Cisco, IBM, HP, Adobe, Hitachi, TI…
    V: EA, MDA, PMC Sierra, McKesson, Ballard, Westport, Sophos

    Rain Days (>2mm) per Year:
    SJ: 62
    V: 161

    • Another loss for Vancouver.
      And, speaking more generally, just how long do Vancouver RE bulls expect the price differences between Vanc and many desirable US cities to last?
      The US market appears to be heading for new lows. We are at a point where only the most besotted Vancoverite hasn’t done the math and felt the draw.
      As ‘Best Place On Meth’ at VCI said: “If you own a home in Vancouver, sell it, go to the US, buy four identical homes, live in one, rent out the other three, retire.”
      The ‘osmotic pressure‘ is very bad for our city. It drives people away.

    • San Jose was #9 in the English speaking world for least affordable according to Demographia’s survey. http://www.demographia.com/dhi.pdf
      With a price to income multiplier of 6.7. Just FYI.

  15. The thing I find curious about the attitude of many Vancouverites to the precipitous rise in local RE prices is their notion that somehow it’s normal. Whether they’re in the market or not, the majority seems to have become acclimated to the current situation — the “recency effect” that Junius mentioned here a few days ago. And yet, the notion that prices could drop just as precipitously is viewed as somehow abnormal. It’s dismissed as quite literally “a notion”. Easily dismissed by trotting out the half dozen or so rather baseless arguments or reasons provided, usually uncritically or even cynically, by the MSM.

    As a species we seem to adapt or acclimate very quickly and easily to situations that most of us would agree, while not caught up in the situation, are quite abnormal. Genocide, for example. What seems unthinkable, in certain societies and at certain times becomes routine. A matter of business as usual.

    This ability to adapt, and even prosper during a period of abnormality, is perhaps one of the reasons why we’ve been so successful as a species. Perhaps periodic abnormal situations are in fact part of the longer term ‘normal’, and are even required as a corrective, something that allows the normal to ultimately reassert itself and continue. The price blow-offs, the testing of absolute boundaries, a necessary part of reestablishing boundaries. Credit gorging a necessary phase before we re-embrace fiscal prudence. Like the child who must hold a hand in the flame to really believe that flame burns, rather than believing that it does based on secondhand information and warnings from a parent.

    I don’t know if Vancouver RE prices are going to drop as precipitously as they’ve increased, but I don’t find the idea in the least bit preposterous, or abnormal. Obviously, over the past decade, a convergence of forces has impelled the dramatic movement up, so surely a convergence of counter but related forces could impel a dramatic movement down.

    • The thing I find curious about the attitude of many Vancouverites to the precipitous rise in local RE prices is their notion that somehow it’s normal. Whether they’re in the market or not, the majority seems to have become acclimated to the current situation — the “recency effect” that Junius mentioned here a few days ago. And yet, the notion that prices could drop just as precipitously is viewed as somehow abnormal.

      It’s not so hard to explain really. People who are in the market by and large require the market to continue to go up. Either because they bought at such a high price that a drop would wipe them out financially OR because their entire retirement planning is based on them selling the house for a huge margin once they retire.

      Either way, what you have here is more of a “Stockholm Syndrom” than anything else which seems to be radiating out to the ones who aren’t yet held hostage by their mortgages and properties. Why? Because they look at those people who’ve “made it” and who want to be part of the party too.

      As for the Chinese “fleeing” China? I somewhat doubt that. It’s a bit arrogant and a bit racist (to say the least) that people presume that all Chinese want to move to Vancouver / Canada. That doesn’t quite mesh with the vibe I am getting from people who have visited China or are from there. There is a huge loyalty towards China, for whatever reason, and I really think what we’re seeing right now is a repeat of what the Japanese did in the US during the 1980s.

      The ones that would leave China are probably the ones who could not afford living here anyway. The ones with means may come to Canada, get Canadian Citizenship and then probably move off to somewhere else (if they really want to leave China, something I somewhat doubt). I think if anything we’ll see a repeat of the Hong Kong Chinese first coming and then realizing that there really wasn’t much here and then going back.

      Time will tell though, one way or the other we will be presented with a bill.

  16. I see those Busloads of Chinese buyers in Vancouver as nothing more than Greaterfools from overseas. Would I be wrong in guessing that some Chinese Vancouver realtor has taken out ads in the Hong Kong media and is capitalizing by bringing naive “investors” who have been well versed by the aforementioned Vancouver realtor that house prices in Canada never go down and that they should invest now for big riches later?

    I would bet the farm that this little get rich quick scheme will fizzle as fast as every other get rich scheme has fizzled in history. I remember watching a news program about foreigners buying Dubai condos sight unseen as they were going up in value by 50K every month. Again, nothing more than gambling that always ends very badly.

  17. Just out of curiousity does anyone know where exactly these houses mentioned in the story are?

  18. Interesting. Nick Calogeros must be a terrible real estate agent…he tried to sell that house for roughly 32% less than it was ‘worth’! Either that, or due to speculation mania, prices are longer determinable by ‘experts’ using historical fundamentals or common sense and so the realtor just took a shot in the dark on the asking price.

  19. Hi Everyone, I live in Vancouver and here is info on this house as listed on: www. bcassessment.bc.ca The home is on a larger corner lot that has a tax appraisal value of $1,357,300.00. It is commom knowledge that government tax assessments are about 20% below market values means this house should have a current market value of approx. $1,628,760 . The asking price of $1,088,000 is done to fuel a bidding war!!! Which is precisely what happended. The selling price of $1,611,000 is just a hair under current market value. PLEASE people don’t get all hyped up and STAY calm. Yeah, right $533,000 increase @W$#@%^. Why not start the asking price at $537,000 and say the sold price was a cool 300% increase!

    Subject Property [Help]
    Property Address: Property Assessment Value: Sale Date: Sale Price: Description: Area-Jurisdiction-Roll Number: Comments:
    906 20TH AVE W VANCOUVER V5Z 1Y5 $1,357,300 1 1/2 STY house – basic 09-200-009697150940000

    • This is a valid point: listing below market is an old west side saw; it obviously had the desired effect in this particular case. I always thought bringing in auctions like in Australia to Vancouver would bring a bit more spice into what is normally a dull market. 😉

    • Thanks for the extra data, Patrick.
      I don’t see many here hyped up (those folks are all out lining up somewhere).

      It’s the final sales price that remains preposterous, even more so if that’s what the city’s assessment is also implying.
      The lot is >33×122, but just how ‘oversized’ is it?
      How much square footage of build can it permit?

      And there is still the matter of the 300K flip across the street…

      • Thanks, I enjoy reading at this site. I agree the prices for a tear down is insane. You’re right the 33×122 is just a standard size lot. The corner lot with trees lined on the east side of the property gives an illusion that the lot is wider than it is. You can build 70% of lot size so that means a huge mansion sized 2818sq.ft.–what a joke.

    • “It is commom knowledge that government tax assessments are about 20% below market values means this house should have a current market value of approx. $1,628,760.”

      Common knowledge? Really? I am a homeowner and I just got my assessment, and it is most assuredly not 20% below the market value of my house (could site a long list of recent comparable sales in my area, but just trust me). But that’s not the point anyways. The point is that someone just paid 1.6MM for a teardown!! In Douglas Park!! I think that Froogle Scott’s comment above hit it on the nose “The thing I find curious about the attitude of many Vancouverites to the precipitous rise in local RE prices is their notion that somehow it’s normal.” It’s not normal to have assessments 20% below “real market values”, it’s not normal to pay $1.6MM for 1/9th of an acre that has a house on it that isn’t even habitable.

      • I agree and just as mad as you. The notion that these prices are “normal” is just ridiculous. Just like 1.20/litre for gas or $1.50/lb for apples is insane and we are being gouged then forced to accept that this is “normal” when the same things cost way less in the USA. Greed has no boundaries but it will end and it won’t end well.

  20. Anecdotes?

    Hmm..how about tonight when I found out at dinner that a middle class family (own their own home, have stable jobs, net worth likely less than $2M) bought FOUR pre-sale condos…

    These are not property developers, realtors, etc. This is their first property “investment”…more like speculation…on 800K+ of condos..

    Just another normal Vancouver family….

    And they say there’s no bubble

    • Symptomatic is exactly right. Reminds me of the Joseph Kennedy story. Which I’ll pull from Wikipedia:

      Kennedy later claimed he knew the rampant stock speculation of the late 1920s would lead to a crash. It is said that he knew it was time to get out of the market when he received stock tips from a shoe-shine boy.[8] Kennedy survived the crash “because he possessed a passion for facts, a complete lack of sentiment and a marvelous sense of timing.”[9] During the Depression Kennedy vastly increased his financial fortune by investing most of it in real estate.

      I like the kicker. He bought cheap after the crash and made a mint, apparently. Fearful when others are bold. Bold when others are fearful, to quote another wealthy investor.

  21. Thanks Patrick….CBC should have done there homework as you have. Just goes to show, info can be skewed any way in order to have the desired effect.

    • You’re welcome. The market is at a tipping point. I don’t know if anyone else feels the same. I don’t have solid proof so I won’t go there. One thing for sure is that the tactics that we are witnessing by “Professionals” is very saddening. Take care.

  22. This is a corner lot that will be split up for multifamily home.

  23. This is so typical of the media to come up with that kind of news in order to fuel this bubble even more. Why don’t they come come and interview me who bought a condo in early 2008 and can barely get what I paid for if i want to sell now… This would have the opposite effect.

  24. I agree this is not “normal”. The house is a dump. 1.6 mill. for a building lot, on a 33′ lot is outrageous. The only way is if they put up a house with suites and laneway housing. Then maybe they could make money in the long run. The big picture here, in which Vancouverites, should be upset with is that ‘middle class’, even upper class people who have lived in Vancouver can’t afford . It is a ridiculous increase in prices, compared to other cities. It is not just because of Vancouver’s natural beauty etc. Take away the foreign buyers and it may correct itself. Incomes have not kept up with these increases, so people keep getting squeezed more and more. Smaller condos or move further out of the city.

  25. Thanks for the information, Patrick.

    Yeah, something really stinks with the story about the house across the street (the one the woman owned for a few weeks). The reporter needed to look into it more, maybe interview the seller, before accepting that scenario. I believe the woman really is a flipper who somehow got the house under market value. There may even be money-laundering involved, perhaps by real estate agents. I can’t wait for the bubble to pop so these things can see the light of day.

  26. Unlike many on this board, I don’t think this is necessarily a sign the TOP is in and that violent, “trap door” type selling is imminent. Although I’d agree this is a bubble waiting to burst, I have no clue when (and how) that will actually unfold. Trying to measure something that makes no sense is pretty much impossible. Sure, if we were to revisit financial armageddon a la Fall 2008, then all bets are off and markets everywhere tank overnight. Honestly, I doubt this will happen in this fashion given what we’ve all witnessed over the last couple of years. I’d say we are more likely to see all these issues drag on Japanese style for many years/decades as TPTB will do whatever it takes to keep things propped up for a lot longer than we may realize. You watch, the moment things do slow down, they’ll bring back all the loose lending policies again. In light of this, I don’t blame people at all for wanting to park their cash in the RE market. Those that are simply closing their eyes, holding their breath and jumping in now with little or no money down to buy a piece of crap in Nowheresville are certifiably crazy IMHO.

    For what it’s worth, 906 W 20th is a 45×122 corner lot assessed at $1.357M whereas the place across the street is only a 33×122 (assessed at $1.145M). Obviously, both were priced ridiculously low to spark a near
    riotous feeding frenzy complete with mobs of designer alpha-moms scratching and clawing for parking spots for their $2000 strollers (while simultaneously keeping their facebook pgs and blogs up to date). Hopefully, whoever moves to this predominantly non-Asian neighborhood loves the sound of 100’s of screaming kids and crying babies, the ever constant background noise from the latest construction project nearby, the lack of parking (well, certainly not enough for families owning a fleet of Mercedes GL’s) and very narrow “traffic calmed” streets that are typical in areas like this.

  27. Just to add some information on the houses. The corner lot has alot of potential for the owner to make serious money if he/she knocks it down and builds 3-4 homes on that corner lot facing douglas park. I agree with most of you that it is too much, only if the buyer moves in to the home that was bought. If you look around the area the corner lots can fit 3-4 homes with no back yard. I am assuming whoever paid this amount will do this. It makes sense. They could sell each home for a million. 3-4million after paying 1.6 million and spending 1million make a profit of at least 400,000, but probably more.
    The real story is how the media provide no information but a pump on real estate. Lack of integrity, but r we surprised?
    As for the other home…… way overpaid by owner. I think they’ll regret that purchase.

    • I’m confused, why do people think that you can build 3-4 homes on that corner lot? Other than a strip along 16th and another strip along Oak and Cambie (major throughfares) I thought that most of the Douglas Park, including this lot is zoned single family residential, is it really that easy to change the zoning? Or is this yet another tired attempt to justify the silly prices being paid?

  28. Meanwhile, back in 2008, VREAA and his cohorts (ie. The Choir), were questioning an investor/speculator who bought a large lot in the Dunbar area.

    Flash-forward to 2011 and that “bet on property price direction” was a solid one. Is 2015 going to be the same? I don’t know but while the naysayers are nay-ing, the risk-takers are making money.

    “Be as reasonable and practical as you like; watch as your world gets smaller and smaller.”

    I often wonder if more people have been hurt by bear blogs (selling too soon/not buying), than will benefit from them due to future market corrections.

    • blammo -> You make some fair points.
      I do have a quibble, however, with you calling that $1.8M purchase of a 53×130 Dunbar in Mar 2008 a “solid” bet. It didn’t look that solid a year later, and it will very likely look worse in future. In fact, it still looks ridiculously pricey, even if you may be able to sell it to someone for more than that today.

      As we’ve acknowledged elsewhere, we bears look silly at this point, and, in retrospect, of course, it’s easy to point out all sorts of ways in which one could have made money as a bull in this market.
      It’s important to realize that is ALWAYS the case in bubbles, until they burst.
      What you’re doing is no different from pointing out, as Nortel was selling for $130, how one could have bought it at $90, or $95, or $105. As we all know, it then proceeded to drop to 50c.

      • By the same token people said GOOG was overpriced when it IPO’d at $80. I can cherry pick meaningless stock references too.

        Something is going on in Vancouver. The city is changing. For the better? I’d say its mixed but it isn’t about me. For some reason Vancouver is a money magnet. Money attracts money. This isn’t Portland, Oregon. The money is almost all imported, yes, but it is a rich city. This is a fact.

        Their are still pockets of affordability in the lower mainland. Apparently nobody wants to live in New West but you can still own a place this for about $230K, with a DP of 20% you could be paying $1400/mos for a 2 bdrm. Seems reasonable to me. At least there are no bridges.

        The reality is everyone wants to own in Yaletown but the problem is everyone wants to live in Yaletown. Ergo, it is expensive.

        Based on 5yr interest rates and China I think its going to be a long 2011 for VRE bear bloggers. What readers really need from bear bloggers is timing. You can’t stay short for ever.

      • Blammo, the difference between GOOG and NT / Vancouver RE, is that the valuation of GOOG now as opposed to when it was valued at $80 is based on the fact that since the IPO of GOOG in 2004, their income has gone from $400MM to $8.5 Billion, more than justifying the move to $600+ in share price. In fact if anything GOOG has never been really mispriced based on FUNDAMENTALS, their market cap of $195 billion is a semi-reasonable 23x earnings. Unfortunately for those of us in Vancouver the same cannot be said. The doubling of Vancouver house prices (on average, more in some areas) since 2004, has not been accompanied by a doubling of average incomes. I love Vancouver, and I think that it is a wonderful place to live, but if I didn’t have family here there is no way in hell that I would pay the RE prices here to live here. The bubble popped in NT when people realized that a company making $500MM a year really shouldn’t be valued north of $300 billion (600x earnings for those keeping count or about 30x the valuation of Google).

      • Great response, Eric. Spot on.

    • blammo is an idiot

      The risk-taker who bought Nortel stock at $150 also made money. For a while. Until he didn’t. As with Nortel, there isn’t any new economic paradigm. It’s just a bunch of hype with an ugly ending.

    • Another thing, blammo: Risk takers make money, over time, when they consistently act with the odds on their side. Cowboys and Pigs get slaughtered.

  29. blammo is an idiot

    Great minds think alike, vreaa.

  30. PLEASE someone tell me if the IDIOT speculator who bought this could have gotten CMHC cover for this purchase ? It will break my heart if this idiot gets to declare bankruptcy and walk away from his greedy mistake. , leaving the rest of us taxpayers stuck with the bill. Is there any limits to house price that CMzhC won’t cover? Sorry for typos, using nook.

    • Unfortunately Judy, CMHC got rid of all limits on loans in 2003, so yes the rest of us taxpayers are going to be stuck with the bill, unless of course this is a rich Asian cash buyer……

  31. haha…’blammo is an idiot’…that’s rich!

  32. Pingback: “As frustrating as it may be” on the Wrong Side of the Bubble, the Bearish Position Remains Right | Vancouver Real Estate Anecdote Archive

  33. For the record we will mention that there are a large number of ‘hits’ apparently coming to this or the following post from a Chinese language website that vreaa is unfortunately unable to read.
    Anybody able to give us the gist of the discusssion there?

  34. Pingback: Spot The Speculator #25 – “Tonight I found out at dinner that a middle class family bought FOUR pre-sale condos. Their first property “investment”.” | Vancouver Real Estate Anecdote Archive

  35. Judging by the info in vancouver.ca/vanmap, the property is on one SFH lot, so it’s not divisible.

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