Still Ignorant After All These Years – “During our lunch my friend told me that he was going to quit his job to become a realtor. He seemed surprised by my comments about the market, and said that he hadn’t heard any of this before, and wouldn’t even begin to know where to look for that kind of information.”

“Recently had lunch with a friend of mine. During our lunch he told me that he was going to quit his job to become a realtor. Was quite surprised as he was just promoted and is doing very well. I launched into the usually bear arguments: debt-to-income, easy lending standards (CMHC), risk of further restrictions regarding mortgages, housing starts and that most economists are waving red flags regarding Canada’s RE market.
He seemed surprised by my comments and said that he hadn’t heard any of this before and wouldn’t even begin to know where to look for that kind of information. We’ve talked about RE before and as I pointed out to him that I’m still wrong but have been right about every other housing bust I called, from the U.S. to Ireland to Spain — Australia’s right around the corner, and that at some point I’ll be right about Canada’s as well.
In any event, I didn’t dissuade him. He is a great salesman and will undoubtedly have success regardless of getting in at the top of the market, taking on tonnes of listings and having to deal with future sellers that will refuse to lower prices because their house is worth more. I wished him luck and told him to make sure that he had plenty of cash set aside to grow his business.”

Manna from heaven at vancouvercondo.info 25 Jan 2012 11:09am

Boy, this is late to the party.
Like arriving at 6.30am, after the cops have broken it up.
Mental note to self: 1. Never underestimate the ignorance of some folks, and, consequently, 2. Never (again) try to estimate how long a speculative mania can perpetuate itself.
Yeah, sure, perhaps it’s we bears who’ve been ‘ignorant’. But the game isn’t over yet.
– vreaa

13 responses to “Still Ignorant After All These Years – “During our lunch my friend told me that he was going to quit his job to become a realtor. He seemed surprised by my comments about the market, and said that he hadn’t heard any of this before, and wouldn’t even begin to know where to look for that kind of information.”

  1. He must have seen those great ads on craigslist promising untold riches once you beome a realtor.

    http://toronto.en.craigslist.ca/tor/rej/2779142416.html

    • Everything in that ad is true. There are more than 10,000 REALTORS® just in Greater Vancouver and they all make six figures. Everyone should be a REALTOR®.

      • If you estimate that the average BC family will sell $2MM in real estate in their life times (2-3 houses, including inflation, etc), this will cost 6% or $120K that will land in Realtor pockets over a family’s life times. It takes 1 month to become a Realtor. I don’t know about you, but I can’t think of many opportunities that exist to save $120K after tax for one month of work. So yes – in a very literal sense, in the same way that it makes sense to know how to cook at home instead of eating out every day, everyone should be their own realtor. The cost of not being one is simply astronomical.

  2. When the bubble crashed in Cali, there were as many licensed realtors as there were real estate transactions on the year.

  3. Here’s an anecdote: All the guys who were drifters in my high school are now Vancouver realtors.

  4. I logged onto Facebook two nights ago and discovered a friend of mine, a brilliant woman with a Ph. D. in economics and fluency in six languages, is….. you guessed it – selling real estate. The really weird thing is, she and I have talked about the coming RE crash recently (within the past year) and more or less agree on it. I guess the cash is just too good to ignore right now.

  5. Be sure you know how you’re making your money, is all.

    One feature of real estate busts is low liquidity; that is, only a fraction of those who bought on the way up can sell on the way down.

    If Vancouver is in for a crash, it is fact that most owners will not sell at anything more than a few % above the floor.

    Sometimes liquidity matters — a lot — and is worth some extra baseline yield.

  6. Don’t insult. If it works for them, then congrats! If it doesn’t, then they find something else. It’s a world where you work for yourself, not for the bears.

    • I was with you up to the last sentence.
      In what way does anybody “work for the bears”?

    • whether PhD or drifter, the the sad thing is that there is nothing better for them to do – what waste and misallocation of resources

      changing career or moving away obviously takes a certain amount of drive/ambition, what might they have accomplished in an actual productive job?

  7. I work with several engineers who all think that their houses will continue to increase in value faster than their income does – forever. I tried to point out that if this is true then when they go to sell them in the future, the only buyers who could afford them would be doctors, lawyers etc. Basically one rung up on the prosperity ladder. Since there are fewer people on each rung of the prosperity ladder as you go up, there will not be enough buyers for all the engineers trying to sell. Being good with numbers doesn’t prevent you from seeing only what you want to see.

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