Attentive Bears – “Sitting in front of my building enjoying the sun, not one person has rung to view the newly reduced price unit that’s having an open house from 2-4.”

“Sitting in front of my building enjoying the sun, not one person has rung to view the newly reduced price unit that’s having an open house from 2-4… As of 3:15”
– vangrl at 1 Apr 2012 3:15pm

Some are watching this market even more closely than we are…
(Thanks, vangrl!)
With rising inventory, low sales, and YOY flat prices, bears smell blood.
But the market has yet to clearly declare direction. By May, perhaps.
– vreaa

40 responses to “Attentive Bears – “Sitting in front of my building enjoying the sun, not one person has rung to view the newly reduced price unit that’s having an open house from 2-4.”

  1. Nice weather could fix that.

  2. “But the market has yet to clearly declare direction. By May, perhaps”.
    – vreaa
    Sharp decline off a double top. It’s doomed. We don’t even need to read the news anymore. Too damn obvious what comes next. Course, the price declines in the coming few months will pretty much kill most buying interest. There will be more than a few who will wish they got out earlier.

    • Farmer -> I’m probably as ‘into’ technical analysis as you are, and you’re correct there is a double top on the latest GVREB chart for SFH average price. The call could be correct; only reservation is that it is a less reliable data point than most… the average price has swung wildly at times because of a few very high end ($8MM+) sales (that was the case in Feb).
      Regardless, the top could be ‘in’.

      • I know my call is early. Not by much though. My high degree of certainty actually relates more to all the other variables that are now at play though. Amongst these considerations are the sharp coming decline in CMHC insured mortgages, the threat of regulatory changes imposed upon the banks by OSFI (and yes it is mostly barking now but the intention is to get them to step back in line or face increased risk) and last the growing pubic awareness of bubble risks in Vancouver. Combine that with a bursting bubble in China and Australia (another commodity nation), the growing risk of rising interest rates coming off a bond bubble and we now have a recipe for a conclusion. As the most important part of the buying season now approaches amidst a backdrop of falling prices and rising inventory it is quite inconceivable that this will carry on another year. My conclusion therefore is that this is in fact going to be a confirmed top. I have no doubts whatsoever in making this call.

      • I agree… up until the “no doubts at all” part..

      • If I knew how to make those winky smiley faces on the computer screen I would send one right back Ed! (But I am a little dim-witted with this machinery….old school you know)

    • These pretzels are making me thirsty

      You make an intelligent case. Enjoy reading your posts.

    • I’m a bit surprised to hear you two are ‘into’ technical analysis. It is somewhat ridiculed in “Liar’s Poker”:

      “The systems usually involved staring for hours at charts showing the history of bond prices. As in Rorschach ink blots, an unlikely formation, such as a human head and shoulders, made itself privately known to the viewer. The chartist—for that is what such a person called himself—would then use his ruler and pencil to draw the future of bond prices based on the assumption that the historical pattern could be projected forward. Miraculously, in a bull market, resulting forecast was usually that the market was going up.
      Actually there was one good reason for using the charts: Everyone else did. If you believed that large sums of money were about to be invested on the basis of a chart, then, as dumb as it made you feel, it made sense to look at that chart; perhaps it would enable you to place your bet first and get in front of the coming wave. Many of our French and English speculators, however, honestly believed the charts contained the secrets of the market. They are aboriginal chartists. They would have used the charts even if no one else did. They communed with their charts as if they were Ouija boards. The charts were speaking to them.
      Now I admit, even for a geek, it was a little embarrassing to let investors believe their white magic. But as long as the chartists placed their bets with me, my jungle guide explained, the reasoning of our customers was not for me to question. Just the opposite. Only days after landing in my new job I found myself praising statements from investors as “I was looking at the ten-day moving average last night, and it is a perfect reverse duck tail and pheasant. Let’s bet the ranch.”

      Lewis, Michael (2010-03-15). Liar’s Poker (p. 202). Norton. Kindle Edition.

      • Jeff-> We really like just about everything Lewis has written. We suspect he’s being a bit playful in that passage, and critical of the real hardcore TA-and-nothing-else geeks.
        We’ve had the TA discussion elsewhere on these pages and I’ll dig up the links for you… Personally I see it as a supplementary analysis that definitely adds to predictive capacity when used in a straight-forward vanilla fashion, along with fundamental and contrarian analysis.

      • My sentiments almost exactly. TA just helps round things out and occasionally makes the case more convincing. I am no purist on the topic either and after closely following some of the most notable chartist’s who belly flopped on calls, have learned to rely on reading the whole picture. Not just the enticing bits.

    • Wus zat? You want the furniture in my house in the deal…..yeah ok.
      The outboard is new, man……sure….keep it. I can sail.
      But the Motorhome. Man we had so many good trips together…..
      Whadya mean? My SUV too?………fine!. Take it. This is crazy.
      But, but, but….I had that dog for three years. She’s spade….fetches too.
      OK. You can have her. I draw the line at the wife though……..
      …….well…..we were probably getting a divorce anyway……..

  3. vangrl on the beat. Every time I scope an open house someone calls the cops.

    • How curiously odd and entertaining, VNB… That’s exactly what we used to say before each foray into the unknown [“We’re all going to…”…]. Of course, we didn’t. Well. Most of us.

  4. Your CMHC insurance doesn’t protect you

    • What a con job, pay money to cover the banks risk.

      • worse. cmhc has only about $20B reserves against +$500B insurance in force. when it blows through that, taxpayers back it via the bank of canada. effectively, the public is funding its own demise. yay. additionally mortgage terms are only 5 year. so unlike usa, banks are in a very strong position vs homeowners. perhaps jesse is right. the banks may simply decide how quickly or slowly this thing deflates by metering access to credit – caveat unless UST yields jump, that would be beyond their control. it’s just evil.

  5. Hey Farmer – you are quoting a CNN piece about the pathetic American market. Just when do you think we will be in a crisis like those idiots have created ? A week, two weeks, two months, two years.
    Just because sales may have slowed down here, it doesnt mean we are headed for a crash.
    If anything sales have been far far too strong for years and it may now slow down, but that is a mile from a crash.

    • Hunh? No CNN quotes from me Ren. My words are all my own.

    • Renters Revenge

      The problem with a slow down is that it can turn into a crash very quickly. The Van RE market is completely detached from fundamentals and is being buoyed only by positive sentiment. Once a slow down starts it very quickly changes the psychology and the support evaporates. Next stop is fundamentals.
      We are not exempt from idiocy.

      • Basement Suite

        “being buoyed only by positive sentiment”

        And sub 3% mortgage rates, which are going nowhere fast.

      • But speculative sentiment is the crucial ‘secret ingredient’…. Without it, market flops.

      • In addition to the psychological aspects, there are real financial mechanisms in place that will hasten the descent, like negative equity, and stricter requirements to qualify for loans. Once the depreciation is obvious, the mortgage industry will adapt in a hurry.

      • There are lots of factors that will ‘collaborate’ on the downside.
        This is why supply/demand curves aren’t linear.
        Lower prices will beget lower prices.

    • tiny test

  6. With >280k applicants to be chopped off the Federal’s list, and with Quebec capping its economic programs for 2012-2013, that should keep the specuvestors in check.

  7. CanuckDownUnder

    If anything the evidence from Australia suggests that it’s going to be a slow, drawn out process.

    I’m not sure if it’s a dead cat or just noise but the market in Sydney is showing signs of strength again. Prices here were up 1.1% for the quarter and mortgage rates have been going up since the start of the year.

    The number of sold signs going up all over my suburb is a little disheartening but then I remember what I pay in rent and it cheers me up. One place that had been on the market for ages at offers over $1.4 million is now available to rent for $600/week!

  8. yltnboomerang

    OH No, HAM’s going South:

    Sitting at an airport this morning in the US I was bored enough to pick up the USA today and the cover article in the money section caught my attention…not because of the headline “High-end u.s. homes lure Chinese buyers” but the info graphic ranking which countries are buying the most us homes where at 18.9B Canada is number 1 (China is only #2 at 7.4B)

    Guess we’re even bigger speculators than HAM!

  9. This anecdote reminds me of some friends who bought one of those new condo developments in the downtown east side about three years ago. Why they bought it in the first place, no idea. It’s a low-quality building in a terrible (though marginally improved) neighbourhood. But even more baffling is that they knew from the get-go that they wanted kids, and the place is tiny. Now that they have a baby, with another on the way, they’ve decided to move somewhere bigger. Of course, since they’re already “in the market” they refuse to rent, and are planning on buying as soon as their current place sells. Well, it’s been on the market for several weeks and, two price reductions later, not a single offer. Meantime, they’ve had to move out in order to properly “stage” the unit. They’re camping at the in-laws’.

    • Basement Suite

      “Meantime, they’ve had to move out in order to properly “stage” the unit.”

      Wow, smell that fresh baked loaf of bread and apple pie cooling on the counter, look at that bouquet of flowers on the kitchen table. Oh a big screen TV in the living room? Where do I sign!

      • Check out that little red cushion on the couch – strategically placed to add a “pop” of colour.

        Outta the way everyone! I’m putting in a bully bid!

      • Avoid the cushion! It’s just a whoopie planted by the Realtors to get an extra laugh.

    • Over the weekend here in Ottawa, I saw an old Dodge Caliber all spruced up with a brand new advert paint job. Guess what the business was. “Ottawa Real Estate Staging”. I kid you not. “Staging” is now a specialty. Imagine that. You hire a realtor to sell your home. She can’t move it, so she refers you to a “professional stager”, who for just a few hundred measly dollars, will help you reap maximum value from your sale!

      Agents outsourcing to other agents. I wonder, do they contact these agents directly? Or do they go through an agency? 🙂 Why not cut another third (fourth? fifth?) party in on the action? What’s a few hundred bucks between good friends?

      I think I’ll start my own business. Raging Ranter’s Cardboard Staging Furniture. As a busy professional stager, you don’t have time to tape those cardboard boxes together. You need to outsource! Let me handle the crude cardboard oregami while you focus on what you do best – staging!

      I’ll outsource the taping and painting to a fifth (sixth?) party to avoid taking on employees and minimize my own costs. Of course I’ll find such services through an agency that specializes in finding such services. Everyone makes money. The economy booms. The multiplier effect RULES! How can you perma-bears be so cynical? Get out there and start kicking a$$!

  10. Someone left an interesting comment on Garth this morning. He said that even at the peak of RE mania in the US, only about 30% of mortages were ARMs. Here in Canada, 100% of mortgages are ARM, meaning the rate is adjustable upon renewal. I don’t know if his stats are accurate. Is it true that even at the height of the bubble, 70% of Americans had their mortgage rate locked in for the entire amort period? That just doesn’t sound right. Surely the guy must be wrong?

    I know such mortgages are available down there, whereas they don’t even exist up here. But if those numbers are true, wouldn’t a crash in Canada have the potential to be many times worse, if interest rates rise even a little bit? Given what happened in the US, imagine what a crash would look like with 100% of mortgages exposed to rate increases within the next 5-7 years.

  11. Basement Suite

    “Meantime, they’ve had to move out in order to properly “stage” the unit.”

    Wow, smell that fresh baked loaf of bread and apple pie cooling on the counter, look at that bouquet of flowers on the kitchen table. Oh a big screen TV in the living room? Where do I sign!

  12. Every markets different i guess. I live in west van and my neighbors house sold in 6 hours the other day for 500k over asking. Condos will definitely be the first to pop.

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