“I am a Vancouver realtor, and here are a few facts. I would characterize 7.5% per annum as a relatively modest gain.”

“I am a Vancouver realtor, and here are a few facts:
1. Yes, a couple of specific areas such as Vancouver’s West Side and West Vancouver have enjoyed the effects of an infux of Chinese money and property values in those areas have risen dramatically in the past year or so. Is this sustainable? I don’t know but time will tell..
2. These localized surges in value are not representative of values in the overall Greater Vancouver real estate market.
3. According to the board, the Housing Price Index for all residential properties in Greater Vancouver shows an increase in value of 7.5%. I would characterize this as a modest gain when compared to recent gains in the areas listed in above [Vancouver East detached YOY +16.2% , Vancouver West detached YOY +23.4%].
4. The benchmark price of apartment (condo) properties – generally the type of properties that speculators buy – has risen 3.2% from Oct 2010. Again, quite a modest number compared with the numbers quoted above.
5. Listing a $4MM condo at $8MM or increasing a list price 78% after not selling does not make a bubble. It means the sellers and their realtors are idiots but it does not mean Vancouver is in a bubble.
6. Some areas of Vancouver’s real estate market are not just locally driven and local incomes are not the sole determinant of affordability. Like it or not, Vancouver is somewhat of a resort city to the world.
Vancouver’s real estate market may well follow global trends if the influx of Chinese buyers slows, or even reverses and if/when global economics deteriorate further. Only time will tell. However, the fact is Canada, and indeed Vancouver, is viewed as a relative safe haven by many international real estate buyers. Given European turmoil and USA economics vis-a-vis debt etc, I seems entirely possible that the Vancouver real estate market will continue to do relatively well. Where would you rather leave your money? Iran, China, or Vancouver? Not a tough choice.”

– local Vancouver realtor Shaun Kimmins, commenting on the article “House Won’t Sell? No Problem, Simply Raise the Price by 78%; It’s Different in Bizarro World”, at Mike Shedlock’s ‘Global Economic Trend Analysis’ blog, Nov 2011
[hat-tip Makaya]

Notes:
1. People have been conditioned to believe that 7.5% per annum gains in local RE are ‘relatively modest’.
2. There are alternatives to keeping your assets in “Iran, China, or Vancouver”.
3. What does it take for a “safe haven” to suddenly seem “unsafe”? Will off-shore investors keep buying, or sell, into falling prices?
4. “It means the sellers and their realtors are idiots but it does not mean Vancouver is in a bubble.” No, but it doesn’t mean that Vancouver is not in a bubble, either. Is that behaviour characteristic of typical market periods?
– vreaa

72 responses to ““I am a Vancouver realtor, and here are a few facts. I would characterize 7.5% per annum as a relatively modest gain.”

  1. How long has Shaun been a RE professional? Has he ever experienced a RE downturn? Is he aware that the rest of the world also experienced significant price appreciation over the last decade and that those “bubbles” have popped leading to a rather pervasive and devastating global economic crisis?

  2. Royce McCutcheon

    The hell? Prices doubling every 10 years is “relatively modest”? Did this guy stir some Ajax into his regular stash of Realtor blow(C)?

    Yeesh.

    While the most ardent bull might argue that current prices and big growth going forward are sustainable, he/she wouldn’t say that much increase is “relatively modest”.

    • Renters Revenge

      The greatest shortcoming of the human race is our inability to understand the exponential function. 7% annual growth rate means doubling every 10 years. So the average SFH price in vancouver in 20 years will be $4.4M? Too bad wage growth is doubling at a much lower rate!
      The most IMPORTANT Video You’ll Ever See:

      • Another big shortcoming with all the predictions thrown around is thinking that everything is static. Like the region will get 50000 immigrants per year and prices will always go up … but, but … higher prices will make people reconsider … higher prices will drive away businesses … overextended households won’t spend in local economy … people will stop coming or move away … Or maybe conditions around the world will make migrations less attractive. It is too simple just to throw numbers around and say that those numbers will hold, no matter what.

      • Clipper -> Agreed.
        In-migration to BC (particularly from other parts of Canada) has already waned, probably because of RE prices.
        The numbers are not constant; heck, the curve isn’t even linear. At some point thresholds/walls are hit.

  3. Been a long time since I posted here. Or any RE blog, in fact. But “Resort city to the world” brought me back.

    Seriously, WTF?

    The Vancouver area is not bad compared to the frozen wasteland we see across much of Canada. It will always attract people from other provinces who seek to escape snow and weeks of rock-bottom temperatures. And it does have the ocean and the mountains together in one neat package. But MY GOD – a resort town to the world? Compared to what? A dozen or more towns on the southern California coast alone that are not only arguably prettier, with nicer beaches, warmer water, and cheaper real estate, but also DON’T have seven months of solid, drenching gloom every year? And let’s not forget – there’s a whole world outside of that. Tropics anyone?

    I’m freaking sick of this world-class, BPOE, “resort” crap we always hear from realtors. Vancouver and region is a pretty decent place if you don’t mind paying more for everything and dressing for rain from November through May (lately June). And if you enjoy forking over ludicrous bucks for east side sh*tholes that are about as far from resort living as anyone could imagine. As i said, it rates pretty well WITHIN OUR OWN COUNTRY.

    The primary reason I’ve stopped my RE militancy is that I’ve just given up. People can be HGTV-addicted loons until they’re so mired in debt they declare bankruptcy. I just don’t care anymore. Housing prices would have to plunge 50% or more for me to even think about re-entering the market. Though as I’ve said before, that would mean you could buy that east side tear-down sh*thole for a mere half million. What a bargain!!

    In the meantime, I continue to rent and have no desire to do anything but as long as I remain in the Best Rainforest on Earth. It has changed my life.

    There. Rant done. I feel all warm an fuzzy again. 🙂

    • nobody you know

      “A dozen or more towns on the southern California coast alone that are not only arguably prettier, with nicer beaches, warmer water, and cheaper real estate, but also DON’T have seven months of solid, drenching gloom every year?”

      I guess that poor bastard hasn’t been to a real resort town before. If Kimmins spent a week in Mission Beach during spring break he’d come back here and cry himself to sleep every night.

    • just another asian immigrant…
      http://www.vancouversun.com/sports/Newest+Whitecap+rock+star+Young+here+play+maybe+sell+some+tickets/5826280/story.html

      Lee decided on Vancouver over 5-6 other cities who were vying for his services.

      “It wasn’t a major factor,” said Lee, a father of two girls. “Obviously I knew there was a vast Korean community in Vancouver but there are a lot of other cities with larger Korean communities. So, no, it wasn’t a contributing factor but it’s still good to have the community here. People know Vancouver is a great city to live in and that was the real reason. It’s a good chance to experience something new and see a new culture.”

    • Gord -> You may note that you got due mention in the recent Sandy Garossino commentary.

    • Seems a bubble within a bubble …

  4. Bullshit.

    Official data shows that benchmark price for ALL areas in Greater Vancouver is up 150% in 10 years. That is on average about 11% increase every year for 10 years!

    Even if the most recent YOY price increase is “only” 7.5%, that is stil not modest, unless you are willing to believe any bullshit served by some realtors.

  5. Listing a $4MM condo at $8MM or increasing a list price 78% after not selling does not make a bubble. It means the sellers and their realtors are idiots but it does not mean Vancouver is in a bubble.

    Nobody has ever claimed that this is proof of the bubble.
    It is just an example of twisted thinking that have become so pervasive in our city over the past few years because of the insane RE market.

  6. Dear Gord,
    Thank you for saying that so I don’t have to! 🙂

  7. Where would you rather leave your money? Iran, China, or Vancouver? Not a tough choice

    Sure, if he puts it this way. I can see how the World’s smartest investors are spending huge amount of time analyzing the pros and cons of buying real estate in Vancouver vs Iran. 🙄

  8. As vreaa pointed out in his initial comments, this realtor presents a false choice. There are other places in the world to put your money besides “Iran, China, or Vancouver.” What a con artist.

    • nobody you know

      He has his black belt in bullshito.

    • in fact, a recent survery of international property investors listed the US and China in the top 5 for real estate investment attractiveness. Canada and Australia were also in the top 5 but the US was #1. The difficulty for many Chinese investors is that it’s much more difficult to launder dirty money in the US. Canada is relatively easy so I’ve been told.

    • I could be wrong, ElNinja, et al – but I think what TheRealtor meant (even if only subliminally) was this… Let’s say you’re a Beijing or Tehran ‘homie’… with a few toonies to your name (and a steady stream of, ah, foreign ‘remittances’)… and let’s say you’re ‘concerned’ about capital preservation/’political’ risk – accordingly, you might well seek out a safe harbour/’refuge’ which offers the added bonus ‘o ‘critical cultural mass’ (as in, a lively expatriate community)…

      Ideally, a jurisdiction where the banks ask few questions and the ‘rule of law’ regarding involuntary ‘repatriation’ does not extend to formal… hmmm….. Starts with “E”…

      Oh yes… that’s it:

      [CanadianHeritage pc.gch.ca] – Appendix I: Bilateral Extradition Treaties

      http://tinyurl.com/cfn4npa

  9. Makaya posted an interview with Kyle Bass describing the surreal experience of talking to a hedge fund manager who thought 7% PA price gains was normal enough to be forecast as the baseline trend.

    “Got it,” said Kyle, who then proceeded to short mortgage exposure and made his clients billions.

    To quote Homer Simpson looking at an overloaded flashing-over electrical plug, “No problem here…”

    • But, but… “And I say: An 8% return is no stretch, when this portfolio gave 15% last year.” – Garth Turner
      http://www.greaterfool.ca/2011/04/27/scary/

      I discovered this article about his previous predictions recently:

      “November 20, 2000: After Nortel has fallen 50% in a month and trading $40: “So, here’s a strategy: If you own Nortel, or a mutual fund holding it, don’t bail out now. We are near, but not at, the low point. If you do not own Nortel, then this is the time to start accumulating it, or a good science and technology fund with exposure to the company. If you’re a gambler, then roll the dice and leverage. If you’re a wimp, don’t read or watch any news for the next six weeks.” (NT changed hands at $2.60 today).

      December 4, 2000: Mr. Turner is wildly bullish on equities and is dismissive of an email from a financial advisor who is suggesting bonds: “Will the Nasdaq again reach 5,000 and the TSE 300 attain 11,000? Will it be warmer again in April? How about clipping this column and taping it to the fridge? Let’s see who was truly dangerous, when the flowers are back.” (Nasdaq closed today at just above 2340). [Nasdaq never went above 2900 in the past 12 years!]

      February 19, 2001: Nortel has just announced that it is losing money and laying off 10,000 employees and is trading around $30: “Now the bright side of this is that since every market correction is also an opportunity; since we all know the Internet and technology will still be the backbone of the future; since the economy will resume its growth in a while; and since the markets will reflect that, this is an excellent time to be buying, and the wrong time to be selling.””

      After his post tonight:
      “Sometimes I make wild predictions (like gold would flame out or Kelowna real estate tank – which both happened), and then suffer through 800 comments from people who refuse to believe me”

      I posted a comment reminding him about his past predictions and said that sometimes, people were right not believing him, especially those who didn’t follow his advice about buying Nortel stocks at $30 with leverage… My comment was fact based and polite… and got censored 🙂

      • And here is the link to the article I was referring to:
        http://tinyurl.com/7m8srkx

        And something ironically funny he said after the collapse of Nortel:

        “July 2, 2001: In a column titled The Four Lessons of Nortel, Mr Turner writes “Don’t get your investment advice from the media”. Something we can agree with.”

        Indeed…

      • Nice dig! I’m impressed that all these stuff are archived and still available. It’s surprising how he managed such an almost cult-like worship of his advice, given his track record. I’m still surprised that at the size of following he gets after his famous world is ending calls in 2007/2008, Xurbia website, and people saying they follow his advices and closing their RSP account that had tens of thousands or even $100K in it and taking it out as cash!!!

      • Hehehehehe! 🙂

      • Yep, good find. I wrote something a bit more cynical last night but I deleted it (wisely, I think). All I will add today is, people need to consider the track record of those they are aligning themselves with.

        Mish has been wrong about CDN RE but at least he got his hedge right (Gold). Even if the broken clock is right at some point in the future regarding RE his hedges will be all wrong (REITS, CDN banks).

      • Apart from being arrogant and never acknowledging he’s been wrong many times in his investment advice, what bothers me a lot is that, people blindly following his advice today may find themselves in serious financial troubles a few years from now.

        One of his advice repeated ad nauseum to boomers is to either sell or re-mortgage their home and invest the proceeds, arguing that the biggest danger facing the boomers is to run out of liquidity.

        While the diagnosis may be right, the remedy he prescribes may make their situation a lot worse. In the current financial environment with all the uncertainties regarding sovereign debt, etc., it is suicidal to leverage yourself and invest in the market. What happens to a balanced portfolio in case of a major financial shock as experienced in 2008? People might get half of their equity wiped out over night and be left with a fat mortgages to pay back for years if not decades.

        What bothers me the most is, as I quoted above, he keeps saying that 8% is a “normal” return on investment, surreptitiously implying that this is what he gets on the portfolio he manages. He has never backed that up of course, but anyone should believe him just because, in 2009, he got 15% of return, forgetting to mention that even a monkey would have gotten that kind of return that year. When you question him on his claimed return or when refer to his track record, you systematically get censored.

        In fact, I came to the conclusion that, behind the claim that he’s only trying to help people, he in fact is using his blog to recruit customers for his wealth management firm (http://www.wellingtonwest.com/advisors/jstomenson/advisorBio.aspx?advisorid=408). He’s just using the classic “fear” (you’ll run out of cash) and “greed” (I can get you 8%/year) tactic. His restless bashing of mutual funds, banks, in fact everybody that is not a wealth management firm run by himself, is just part of his tactic.There is unfortunately enough worried and naive people that would fall on his trap.

        I made a previous calculation on this blog before. He is a fixed-fee advisor and takes, regardless of the performance of his portfolio, 1% of management fee. He’s claimed repeatedly that these type of advisers are the most honest and efficient, forgetting to say that they are also probably the most expensive ones too. The funny thing is, if you ask him if he could give him the name of such an adviser here in Vancouver, he would tell you he doesn’t know any, but would make you a favor by managing your money…

        To understand why, in three years, he has never missed a post on his blog (I’ll get back to that later), you only have to make simple calculation. Let’s assume that, through his blog, he has recruited 1000 customers in the past 3 years (I don’t know how accurate this number is, but I would assume, considering the success of his blog, that it is not impossible), and let’s assume that the average customer has either sold and re-mortgaged his house, for an average “ready to invest” sum of $250,000 (with the average house price in Canada north of $350K, this is not an outrageous assumption). The total amount of fund to invest recruited through his blog is $250 million. Since he charges 1% of management fee every year on that amount, that’s $2.5 million straight for him, every year. Now you can understand what truly motivates him to write this blog…

        To conclude this long post, I believe this guy is dangerous with his investment advice, unethical with his 8% ROI claim, and above all, I think he is also dishonest. I’ve read his entire blog and I’m pretty sure that some of his posts, and answers to comments received are not written by himself. I’m not the only one to have figured that out since some people on his blog have expressed their skepticism before. I don’t think he will ever make some disclosure or acknowledge it.

      • Excellent points! I always felt that some of his claims are really borderline ethics wise, if not outright illegal. Especially the claim of 7% or 8% portfolio return with his recommended investing style, and advice to leverage one’s home to invest proceeds. As well, a lot of claims and such about how preferred, REITs works are extremely incomplete regarding risk and various market events like a market crash, or just interest rates normalize to say 3 or 5%. While he may save some people from the housing crash, it’s likely he’s going to ruin a lot of people’s life with his investment advices. Well, easy come easy go I guess.

  10. There will be a day when you remember these days as a very good time…

    • there will be a day when you remember these days as an excellent buying opportunity.

      • Renters Revenge

        An excellent opportunity…to buy yourself a lifetime of debt servitude.

      • formula1 isn’t joking, folks.
        Noted, formula.

      • only correct if you believe that hyperinflation is on the way. But in this scenario, most people will not be able to afford a glass of orange juice.

      • A thought crossed my mind the other day: isn’t higher education a good inflation hedge? Sure a fancy law school costs $50k/yr, and a fancy MBA costs $100k/yr, but after high inflation those expenses will seem pretty minimal. And your new skills will put you in the top percentiles of income earners, regardless of what happens with inflation.

      • Jeff -> you’re talking of two factors, worth separating:
        1. Debt, of all sorts, will be inflated away in high inflation scenario, sure, but what if we experience significant deflation? (Jury still out, IMHO).
        2. Yes, ‘investing in yourself’ (= education) is good, but surely not at any price? … we read of the ‘bubble’ in higher education fees (but we don’t follow those markets closely).

      • Deflation can’t happen if the guys running a fiat system won’t let it. Hyperinflation is also unlikely because of the (seemingly) permanently high unemployment rates in the Western world.

        The most likely scenario is cost push inflation combined with no real median wage growth – which equals stagflation.

      • Vreaa, thanks for clarifying my statement and sharing your thoughts.

        “1. Debt, of all sorts, will be inflated away in high inflation scenario, sure, but what if we experience significant deflation? (Jury still out, IMHO).”

        In a time when money is free and inflation is high, one should be motivated to incur debt. But debt for the purpose of consuming depreciating assets seems not so wise: after a few years the value of your assets is not much.

        So if one is forced to consume, what is an asset that does not depreciate?
        Aren’t your job skills something which hopefully do not depreciate much (at least, for the remainder of your working life)?

        “2. Yes, ‘investing in yourself’ (= education) is good, but surely not at any price?”

        I guess one would have to do careful calculations (which I have not done) to determine if the investment is likely to pay off.
        US tuitions can be high, but I don’t see a higher education bubble in Canada. McGill law school tuition for example is $7500/yr, which seems quite reasonable.

      • 4SlicesofCheese

        Hey Formula1 real question, do you think the people in the states who bought and are underwater or got foreclosed should have bought when they did?

      • 4 slices,
        depends on the reason for buying.
        If you’re buying to raise a family there’s never a bad time. If you put the potential profit and pure investment value ahead of your personal circumstance you might never buy i.e. like most of the buyers on this site.
        FYI – there are markets in N. America that almost never rise/fall and are stable for years, yet people still buy real estate…why?

      • 4SlicesofCheese

        @Formula

        Fair enough answer, but I think the families who only wanted a home but have suffered large house price declines would disagree that there is a never a bad time to buy a house.

        So you are saying if you were in the States and you had the information available to you, you would still have bought?
        It is hard to believe anyone who owns can really believe they dont care about declines in prices, I know alot of my friends say they would be ok with that if that happens here, I know I wouldnt be ok with that.

  11. Guys, this is off topic, but this is a must read as it concerns the fragility of the financial markets in general and the Canadian Banks in particular. Frightening…

    From zerohedge:

    “Why The UK Trail Of The MF Global Collapse May Have “Apocalyptic” Consequences For The Eurozone, Canadian Banks, Jefferies And Everyone Else”
    (…)
    “Simply said: when one truly digs in, MF Global exposes the 2011 equivalent of the 2008 AIG: virtually unlimited leverage via the shadow banking system, in which there are practically no hard assets backing the infinite layers of debt created above, and which when finally unwound, will create a cataclysmic collapse of all financial institutions, where every bank is daisy-chained to each other courtesy of multiple layers of “hypothecation, and re-hypothecation. In fact, it is a link so sinister it touches every corner of modern finance up to and including such supposedly “stable” institutions as Jefferies, which as it turns out has spent weeks defending itself, however against all the wrong things, and Canadian banks, which as it also turns out, defended themselves against Zero Hedge allegations they may well be the next shoes to drop, as being strong and vibrant (and in fact just announced soaring profits and bonuses), yet which have all the same if not far greater risk factors as MF Global. Yet nobody has called them out on it. Until now.”
    (…)
    ” in effect the rehypothecation scenario affords the same amount of leverage, and potentially even less supervision that the CDS market. Said otherwise, the counteparty risk of daisy chaining defaults is on par with that in the case of AIG.”
    (…)

    With weak collateral rules and a level of leverage that would make Archimedes tremble, firms have been piling into re-hypothecation activity with startling abandon. A review of filings reveals a staggering level of activity in what may be the world’s largest ever credit bubble.

    Engaging in hyper-hypothecation have been Goldman Sachs ($28.17 billion re-hypothecated in 2011), Canadian Imperial Bank of Commerce (re-pledged $72 billion in client assets), Royal Bank of Canada (re-pledged $53.8 billion of $126.7 billion available for re-pledging), Oppenheimer Holdings ($15.3 million), Credit Suisse (CHF 332 billion), Knight Capital Group ($1.17 billion),Interactive Brokers ($14.5 billion), Wells Fargo ($19.6 billion), JP Morgan($546.2 billion) and Morgan Stanley ($410 billion).”

    “And people were wondering why looking through the balance sheet of Canadian banks revealed no alert signals. It is because all the exposure was off the books! Hundreds of billions of dollars worth.”

    • Here is the link to the full article

      http://tinyurl.com/d8n5drn

      • Are Canadians with deposits in Canadian ‘big five’ banks vulnerable?
        One hopes not.
        Thus far in the US, despite their meltdown, not one bank has had to renege on deposits, to the best of our understanding.

      • @vreaa

        usually, deposits are guaranteed (at least it is in my other country) by the government, but in case of bank runs, this is of little help initially, since you won’t be able to access your money for a while.

        I’m not expert enough to judge whether these guys are really onto something, but zero hedge has a fairly strong track record of digging dirty secrets out of wall street. If they are right on that one, things may get messy very quickly.

      • Interesting post. (Lengthy!)

        I liked this comment from Tyler Durden:

        “It is not Wall Street’s fault government has become a monster, and more importantly, a monster which the people have let usurp all power in exchange for promises of (insolvent) welfare payments and mind numbing primetime TV.

        What OccupyWallStreet and the rest have to realize is that while Wall Street is a symptom of all that is broken and flawed in modern society the cause, the real cause, is us.”

      • Makaya -> In Canada, cash deposits are only insured to $50K.
        What do people with substantially more funds in ‘big five’ banks do to manage the (low) risk of systemic failure?

      • It’s $100K for deposits in banks and “100%” for deposits in credit unions.

      • I believe CDIC insurance is up to $100k per bank. (http://www.cdic.ca/)
        US FDIC insurance is now up to $250k per bank.

        So across the 5 Canadian banks, that will allow you to stash $500k away risk free. Anyone with more than $500k in cash should probably work with a professional. I personally maintain bank accounts in the US too.

      • The credit union “unlimited” guarantee always makes me chuckle. There is a small but finite chance that I might have to write an “I told you so” post in the next 5-10 years.

      • That’s why I wrote “100%” in quotes.

      • Lots of ways to boost the CDIC, consider joint accounts, you’re up to $1.5MM, even more if you have trusted family.

        Never mind you can just buy unlimited government short-term paper.

      • Possibly more important, CIPF (Canadian Investor Protection Fund) insures investment accounts in qualified brokerages to the tune of $1M each, possibly more if you read the fine-print. And that’s separate accounts, so if you have an RRSP and a personal general investment account with the same institution, they’d each be covered to $1M.

        Now, where do the CIPF funds come from in the event of a large meltdown?

    • the banking system and govt backstops are designed to let high-rollers gamble and get bailed out at everyone else’s expense. it has been this way for a long time. it is just that the gamblers are now willing to risk destroying their own casino. maybe they see something that will still benefit them in the end game. in the event of systemic bank run and similar, the choices are let the system blow up or print currency. they will print currency, nationalize failed banks and financials, etc. the 2008 scenario has already played out – stockman on crony capitalism at mises.org. see how quickly, the CBs coordinated to keep euro banks liquid recently. of course this does not solve the underlying issue which is too much credit being issued where and when it shouldn’t be, and creditors not taking their lumps. so, the real problem will be when sovereign bonds and currencies come under pressure. it does not have to be hyperinflation. 20% yoy cost of living inflation is very strong possibility if they keep printing to bailout all the failed bets. note: RE is not a hedge against this unless it is income producing at a good yield under battle conditions – like a farm, which can also take you off the grid to some extent. leveraged residential RE would pretty much be a financial deathtrap.

    • deposits in US banks are insured, but to a certain $$$ amount. I think it’s 150K?

      US banks are exposed to a euro collapse. Unfortunately. Good Times!

      Here’s economist Brad DeLong on the topic, Nov 9th:
      “Time to Spread Foam on the Runway: The Federal Reserve Needs to Act Now to Firewall Off the Eurocrisis”

      “The Federal Reserve needs to buy up every single European bond owned by every single American financial institution for cash before the increase in eurorisk leads American finance to tighten credit again and send us down into the double dip.

      The Federal Reserve Needs to do so now.”

      http://delong.typepad.com/sdj/2011/11/time-to-spread-foam-on-the-runway-the-federal-reserve-needs-to-act-now-to-firewall-off-the-eurocrisis.html

  12. Finally got back from a trip down to Seattle for the last few days, a lot has been posted on this board.

    I think this agent is actually trying to tell the way he sees it. I have talked to a ton of agents and they honestly believe this. I would be interested to see an index of apartment pricing over the last ten years. My friend who bought a condo in coquitlam has only seen an price appreciation of about 5% per year over the last 5 to 6 years while my parents’ place in Vancouver has gone up about 120% in 6 years, so it’s not unbelievable what he is saying.

    I look at SFH different than apartments because like I said before, in NA people think that SFH’s is a must have, in Asia it is a luxury and since Vancouver is about 40% asian, that does get factored in with the ratios. So apartment pricing and price to rent ratios are more telling to me.

    One thing I don’t get with this guy is this: he is clearly talking about Vancouver being China’s resort city, cause I don’t know anyone other than the chinese who sees us as the premier destination over some place like Hawaii. So why does he not simply say it. He believes that we will continue to get more and more rich chinese immigrants due to our economic policies and other factors. Whether Vancouver’s housing tanks or not this trend will continue. Like I said before, there is very few other places that fits their needs more than here and they are all trying to get out. Money laundering is part of their motive but who can blame them, pretty much all money made in china is dirty, there is no such thing as clean money.

    • Julian I know there is a perception of stability/value with land with certain cultures. Fine but they are sacrificing their capital for this perception.

      I think there is more land around than people who hold it in such high regard. Maybe certain areas of the city but even at aggressive immigration rates there will be a majority incumbent population who won’t have the intestinal fortitude to buy at all costs for at least a generation.

      • What I mean is that it is unlikely that first-gens will ever make up the majority of the CMA, and even then first-gens are not exclusively drawn from cultures where land is held at such a premium. What may be starting to happen now — and there are nascent data beginning to support this — is that those who do not place an inherent premium on land ownership are moving to other locales. The required impetus of those who do place large premiums on land to fill this gap will be significant. We’ll see if they are willing and able to step up to the plate.

      • @Jesse, good point.

      • What do you want me to add? I am not even sure what this is regarding exactly.

      • bla bla bla asians bla bla bla asian culture

        new paradigm bla bla bla asians bla bla

      • Yes, unlike you, I understand the situation quite well and can articulate points on both sides of the argument rather than simply making snide remarks which does nothing to enlighten others other than being a joke. Sorry, some people actually want to learn something from the exchange and are quite productive at it.

        Btw, just as I caution my Asian friends not to ignore the might of US innovation. I caution you to not ignore the rising power of Asia when the entire world is counting on China and India to provide the productivity growth over the next decade or so to the entire world. If you do, you will miss many money making opportunities. That’s the name of game no?

    • Official numbers by REBGV for “all areas”

      “Detached” benchmark price is up about 150% in 10 years.
      “Apartment” benchmark price is up about 150% in 10 years.

      Interesting, isn’t it?

      • Hmm, that’s actually kind of interesting, cause I have seen a lot of places on the surburbs where attached housing prices have greatly lagged behind detached prices. Coquitlam is a good example, burnaby too to a certain extent.

      • “Attached” is a separate category – it’s up “only” about 125%, so you are correct.
        Apartments – Condo’s were not lagging, though, in general.

      • btw, bubbly, do you have an average price for condos in vancouver? and do you have an average rent price too? I am looking for these statistics for some potential modeling testing out my theories.

  13. “My friend who bought a condo in coquitlam has only seen an price appreciation of about 5% per year over the last 5 to 6 years while my parents’ place in Vancouver has gone up about 120% in 6 years, so it’s not unbelievable what he is saying.”

    Are you sure you don’t mean 5% in 5 or 6 years? Lots of people in Coq have condos stuck at 2007 prices. Still that doesn’t mean they can’t decline in a crash. When you add all costs of ownership, its still a fair bit more than renting.

    • He got it in 2005, and he got it about 30% cheaper than today. It isn’t bad in terms of rent to ownership ratios. Price currently is abut 220 times monthly rent, which is about 20% over the norm.

  14. It’s always the same sentiment isn’t it, “The smart people are doing it, the savvy investors are doing it, I’m doing it, therefore I’m savvy, I also subscribe to Vectorvest because I’m a “savvy investor” and if you’re not doing it you’re not savvy and you have no idea what a lucrative investment is.”

  15. Let’s break down each of the points in this guy’s shameless strategy, because these same tactics are being used every day to bully homebuyers in Vancouver.

    1. “I am a realtor, and here a few facts”. Translation: Don’t even attempt to question me. I’m a professional with inside knowledge.

    2. “Localized surges are not representative”. Translation: There are always some exceptions, y’know, but the market overall is healthy and normal.

    3. “7.5% is a modest gain”. Translation: Past rates of appreciation were much higher, and because those past rates were well-founded, the current rate is “modest” and sustainable by comparison. Those who warn of a bubble are scaremongers. (Never mind that 7.5% growth would imply a doubling of values in less than 10 years).

    4. See above.

    5. “Increasing the list price 78% does not make a bubble.” Translation: Let me distract you from concerns about a bubble by calling out a few non-professionals who don’t understand how the market really works. Everyone else is rational and all’s good.

    6. “Like it or not, Vancouver is a resort city to the world.” Translation: First, you have no control over this so stop your whining. Second, you are geographically ignorant. This is the BPOE! Haven’t you seen the celebrity endorsements? The world’s elite are flocking here because, unlike anywhere else in the world, we have water and mountains!

    7. “Where would you rather put your money? Iran, China, Vancouver? Not a tough choice”. Translation: You are so brainless that I will not only pose a question based on a false choice, I’ll answer it for you.

    • Nicely done.

      High schools should teach classes on “critical thinking” where they teach students to decompose and translate biased and self-interested articles exactly how you have done. I plan to personally teach my kids about this.

      • dont forget the eternal,

        the ubiquitous..

        “SOME PEOPLE SAY…”

        ie: “Some people say Vancouver Real Estate is in a dangerous speculative mania fueled by cheap credit..”

        everyone loves an anonymous source – that adds legitimacy, donchyaknow????

  16. D E S P E R A T I O N !

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