Don R. Campbell, President of REIN, In His Own Words – “Bubble, bubble boil and trouble! I just keep hearing this whole thing about bubbles this and bubbles that… It’s not a bubble. It is a very readable cycle.”


“Bubble!”


“Very Readable Cycle.”

“Guess what? Bubble, bubble boil and trouble! I just keep hearing this whole thing about bubbles this and bubbles that.. and I just wish people would start paying close attention to the underlying Real Estate Cycle and the market drivers and the market influences rather than this amorphous bubble idea that keeps floating around… pun intended… that there’s this thing that’s going to burst.
Let’s talk about the condo market, that’s the one that everybody’s taking about “Oh my goodness there’s a big bubble going in condos”..
I like to invest in a property that exists, but let’s talk about prices, demand…
Take a look at some of these numbers… in 2010 there’s going to be 6,693 new condo units that were occupied and moved in… now 2011 15,902 units.. twice the number being put into the market.. big number, let’s be realistic… ah, but they were still being sold… 80, 90, 100% percent sold… but here’s the issue that you’re going to see… 2012 pre-construction totalling 25,893 units… 108 projects already being built… those condos are going to come onto the market over the next couple of years… let’s think this through quite clearly. If you’ve got that giant influx, it was pretty hot at 2010 at 6,000, it was super-hot in 2011 with 15-16,000… we’re going to add another 10,000 units over the 2011 number?.. wow, think of how that market is going to try to absorb this. Now, here is something that you’ve gotta know, is the average price will not be dropping.. why is that? quite clearly, is the contracts have been signed, they’ve been signed over the last couple of years, during this super hot market… so those contracts won’t come in and get registered into the average price of a condo until the keys are handed over, and that’s usually, what, a year and a half, two years, after the contracts signed. So the heat that we’re feeling here will carry through on the average price over the next couple of years. But as the market supply demand starts to get a little bit out of balance, starting in 2012, especially late 2012, you’ll probably start to see some discounts… or some ‘price slowdowns’ in that market as supply outstrips demand.. and contracts signed then will not play out until 2014.. so you’re not going to really see an average price collapse or bubble explode or any of these other terms I get to see tossed around all over the place.. because it’s all about the contracts and when the keys are handed over. So, let’s be realistic… We get 26,000 units coming onto the market in 2012, we have another 17,000 in 2013… people say “But Toronto is growing by 100,000 people per year.. but can’t we step back a little… when you’re either immigrating or migrating, the majority of those people are not going to be able to step in and afford $2,500 – $3,000 rent for a new unit, or have the money to buy one of these units. So, although the population is growing, the people who can afford to buy these properties aren’t growing. So why do I bring this up? Because, inevitably, you’re going to see that cross of the supply and demand line, you’re going to see incentives come into the market, and you’re going to see… let’s use the term ‘negative influences’.. on the market… you’re going to be seeing people buying five, six, seven units, from off-shore, and then wondering what they’re doing come 2013-2014, and those properties will then be dumped onto the market to try and realize some capital. So, let’s be realistic about the condo market: It’s not a bubble that’s going to go ‘kaboom’… What it is is a very readable cycle, that has market influencers, and market drivers, and your job is to step back from the frenzy, and when somebody says to you “This time it’s different”, run away as fast as you can… because over the last 20 years we’ve heard that three times only to see the market flatten and or fall off. Never buy something you don’t understand. Be smart. Invest well. See you soon.”

– ‘Real Estate Bubbles… Fact or Fiction’, self posted you-tube video, Don R. Campbell, President of the Real Estate Investment Network™, 8 Nov 2011

One man’s “very readable cycle” is another man’s bubble. – vreaa

22 responses to “Don R. Campbell, President of REIN, In His Own Words – “Bubble, bubble boil and trouble! I just keep hearing this whole thing about bubbles this and bubbles that… It’s not a bubble. It is a very readable cycle.”

  1. Babble Babble Flibble Flabble.

  2. “One man’s “very readable cycle” is another man’s bubble. – vreaa”

    Agreed. It’s just semantics. Doesn’t change any underlying arguments about the fundamentals.

  3. I don’t think it’s all that easy to time the price cycles, but he’s right that a huge inventory coming onto the market will put downward pressure on prices.

    Are those numbers for new condos correct? Sounds like he’s talking about new condo inventory in Toronto, I’d like to see the numbers for Vancouver (city and Lower Mainland).

    • “he’s right that a huge inventory coming onto the market will put downward pressure on prices.”

      Agreed. Note he doesn’t use the ‘S’ word (sell).
      But clearly he’d be planning on ‘lightening up’ into this, wouldn’t he?
      And how many others have similar plans?

  4. Toronto adding 100K/year with land and great transit
    Vancouver adding 45K/year with zero land and avg transit
    -so one is in a bubble and one isn’t?
    When you see a “talking head” come on and offer opinion about the market I usually look for the motivation to do so, from each side. Seems this talking head might be having a difficult time finding properties that are investment-worthy and is hoping to talk the market down (same motivation as the smucks here).
    But I do agree that a condo is a risky investment right now.

    • You’re ‘misreading’ Campbell.
      Like you, he is mocking those who see bubbles, in any Canadian markets.
      He (and his REIN followers) are long Canadian RE.

  5. so his motivation is to talk the market up?
    in any event…condo market is a suckers market. Buy land. If you can’t afford land here buy land elsewhere.
    Be smart. Invest well. See you soon

    • “in any event…condo market is a suckers market. Buy land. If you can’t afford land here buy land elsewhere”

      Why do you say that, Formula1?

  6. thesis assumes all other underlying factors are unchanged. but very clearly they are not and you could easily argue these other factors are the more important price drivers. seems to be a local, sort of micro analysis that does not account for extremely significant external macro factors. somewhat interesting that it nonetheless concludes there will be a reversal. construction ramp is just a response to the price spike. if the demand does not materialize to that extent, you have just pulled in 1-2-3 decades worth of construction. and this overhang will depress prices over a comparable length of time. the more prices fall, the faster the overhang clears and vice-versa.

    @f1, the pop growth figures are not a guaranteed moving fwd and generally not useful to predict a turn. also, it doesn’t matter how many come if they don’t bring capital or the ability to create it. eg. what would happen if 5k microsoft employees decided they should work from van instead of bellevue? compare to net influx of 50k bums.

  7. I actually somewhat agree with this guy. I have always maintained that if the condo constructions stayed flat, then there is far less danger because it would squeeze supply. However, we all know how greedy all these developers are, and now we are seeing an oversupply of condos into the market. Hence why I never own condo. Whereas SFH are going down in supply, condos are not.

  8. Nonlinear Systems apparently wasn’t offered in the syllabus at Real Estate Pumper Daycamp.

    Nobody can freezeframe quite like old Don. Nobody.

  9. Well, we’ve seen ShanghaiRealtors hustling properties to passing commuters with hand drawn placards… how about a BeijingRealtor catching a little ‘shut-eye’… (hint: things are a ‘tad’ slow)…

    Best of all, we get a superlative QuoteOTheDay!…

    “It took me at least four years to save the 500,000 yuan, but the money evaporated within eight months!” – Li Wei, BeijingSalaryMan

    [ChinaDaily] – Buyers and developers face some harsh home truths

    http://tinyurl.com/6on66xv

    • This is sad. Vancouver isn’t the only place with addicts.

      On China, I know people are starting to get all worried about home prices, but this doesn’t mean much yet. My guess is there are still a few more years to go before Judgment Day. (And by “Day” I mean a Venus day.)

      • lost me at the end but this begins with blankfeins doing gods work

      • chubster: US housing peaked in 2005 in terms of sales. Another 3 years elapsed before the system seized. I think China has a ways to go before that point, if it reaches it at all. Credit crises are not acute events, they are typically drawn out over many months or years. When we look back at it all, sitting in our retirement homes, it will look like it happened all at once.

  10. @jesse. maybe. but note that us bailed out the insolvent. this is why it is taking so long. otoh, china tightened voluntarily. also, the whole 1st world west has leviathan 2 in form of entitlement society, insanely underfunded – effectively levered. china does not. curiously, canada has leviathan 2 but fiscal situation is a-ok, so mostly unlevered. this and the resource wealth per capita probably means while everyone gets clobbered, it will be able to withstand worse. eg. my co came out of the 2008 downturn way ahead – super tough on us but lethal on the competition.

  11. Don Campbell was a big supporter of buying real estate in Edmonton and did not forecast the big drop in real estate prices there. He helped a lot of people lose there shirts too. He is a great marketer like his pal Ozzie. He a genius for profiting in downturns and upturns. He just changes his tune to suit whatever is happening.

    • He’s a self-promoter with significantly less gravitas than Garth Turner but his maxims and prognostications have about the same value.

  12. Don Campbell is an uneducated buffoon, who’s main goal is to get people to sign up for his investment course which costs $3400. Good thing ol Don is here to lead…

    Idiot.

    People are waiting for the market to collapse so that they can buy in at prices where they can rent out for a profit. There is a massive amount of capital just waiting for deployment. These people will not buy until the prices are right. As one of my bosses used to say “You buy when people are bleeding in the streets” Of course he’s sold now and just waiting to buy back in. No one in their right mind would buy a condo in this market.

    As a matter of fact, it shouldn’t even qualify for tax deductability as one of the criteria is a reasonable expectation of profit.

    • So right! I know some realtors who also think Don is an idiot. I, for one, can never understand what he’s saying. It’s like he’s speaking some alien tongue. I can’t tell if he’s bullish or bearish despite reading articles that quote Don saying that Alberta prices will go up 6 to 7% per year. Maybe eventually he’ll be right but the last three years have seen absolutely no growth in average RE prices with the bottom end now declining for a 5th consecutive year. Just goes to show that you can have the highest employment growth in the country with a rebound in interprovincial migration and steadily declining mortgage rates and moribund real estate market. No HAM: no bubble.

  13. Book title behind his head that you can’t read…. Idiots guide to … “how to suck in suckers in the RE Bubble”

    and the other one below that… “what colour is your parachute?”

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