Globe & Mail; Sommerville; Rennie – “No Bubble” – “Those in the know out here don’t seem to be too alarmed by what they’re seeing” … “Talk of housing bubbles makes for provocative sound bites but isn’t based in reality.”

“While there are certainly those outside the city – including economists at some of our more reputable financial institutions – who think Vancouver is heading for an abrupt decline in house prices, those in the know out here don’t seem to be too alarmed by what they’re seeing.”

“Tsur Somerville, the oft-quoted real-estate economist from the University of B.C., doesn’t see signs of a major real-estate story brewing. He actually holds a refreshing perspective on the local scene. He won’t even go so far as to say that buyers hold the advantage at the moment, even though supply far exceeds demand.
“When the average house price is still north of $800,000, then buyers’ market is a term I like to avoid using,” he says.”

“Some think that while the housing market might not be ready to go bust just yet, the condo arena is. But marketer Bob Rennie, someone who follows this area more closely than anyone in the city, says that’s nonsense. … Mr. Rennie said talk of housing bubbles makes for provocative sound bites but isn’t based in reality. He produced a dazzling array of charts and graphs to back his claim that the future of condo sales has never looked brighter.
Now, you might expect someone who sells condos for a living to say something like that. But Mr. Rennie makes a pretty compelling argument that something is afoot that backs his claim. A massive demographic in Greater Vancouver – those between 55 and 74 – is sitting on $88-billion in equity. They are beginning to downsize.”

“And he may well be right. But for now, the market is colder than it’s been in a while. That may not be a bad thing.”

– from ‘Cooler housing market no catastrophe’, Gary Mason, Globe and Mail, 19 May 2012

So, Global TV (16 May), The Vancouver Sun (17 May), and now The Globe and Mail, have all reported bullish outlooks on the Vancouver RE market this last three days, all citing as sources various combinations of: Bob Rennie, Tsur Sommerville, Helmut Pastrick, and the CMHC.
We would have liked to have seen something less homogenous and more analytical from our media, but perhaps our expectations aren’t low enough.
– vreaa

22 responses to “Globe & Mail; Sommerville; Rennie – “No Bubble” – “Those in the know out here don’t seem to be too alarmed by what they’re seeing” … “Talk of housing bubbles makes for provocative sound bites but isn’t based in reality.”

  1. pricedoutfornow

    I’m sure tired of hearing the same “experts” time and time again. Why don’t they ever interview someone who has a different view? There are plenty of reputable ones out there. It would be great if say, Global would interview Ben Rabidoux or Garth Turner, or even someone from The Economist. Instead, they present some headline story about “oooh maybe there’s a housing bubble”, but the conclusion is always the same-they interview the same jack*sses who say the same thing “Nope, no bubble.” It’s starting to make us look like country bumpkins who can’t go any further afield to get an opinion about a story. I think I’ll write Global an email, they’re really starting to piss me off.

    • Rabidoux has articles that appear on the G&M website. Marr’s failing is his inability to find quotations from people who are bearish. That’s his — and his editors’ — failing, being lazy and not asking the tough questions. Better to turn to rhetoric.

    • yeah, should have interviewed vreaa to get more hope to those who have been priced out!

    • It’s simple they don’t want any sort of panicking. Majority of people trust what they hear in news. If Sommerville says there is no bubble they believe him. The thing is if we keep closing our eyes and saying everything is alright our economy crash will smash us down as it happened in the US in 2008. We should admit that the high household debt level is a problem and make necessary steps to prevent its growing.

  2. “While there are certainly those outside the city – including economists at some of our more reputable financial institutions – who think Vancouver is heading for an abrupt decline in house prices, those in the know out here don’t seem to be too alarmed by what they’re seeing.”

    Those “in the know” also happen to also be remunerated by real estate industrial interests. Perhaps those in the “abrupt decline” camp, looking at “the numbers” and comparing to every other real estate market on the planet, might be a bit more objective.

  3. The question for Rennie’s comment is how much leverage is attached to that 88 billion dollar number, which would give some indicaton of the potential for a decline in sale prices and the value of that equity. It’s interesting to count the number of open houses on the east side, six years ago when I was buying there were 25 – 35 per week, now there are a couple of hundred, which is a good barometer of increasng supply. I would like to see time on the market numbers for SFH on the east side.

    • 88 billion. A nice number. Not for the eights but for its precision. How very clever, to cite precise numbers alongside hand-wavy concepts about demographics and buyer intents. Oh, I wish I was a silly, slippery snake

    • oh might Pareto! … we summon you … if 20% try to extract their part of the ‘$88B_equity’, it will leave about ‘$22B_equity’ for the remaining 80%

  4. Paul Streppel

    55-74?

    almost half the group that sits on their equity bubble are pension recipients.

    i’ve had a lot of fun with this group over the years… referring to them as the ‘bully boomer’. For them, it’s been easy accumulating bubble value as there’s always more people to buy what they’re flipping.

    .. but one day.. the little kids grow up and fight back

  5. “When the average house price is still north of $800,000, then buyers’ market is a term I like to avoid using,” he says.”

    word!

  6. granite countertop

    Heh. “… those in the know out here…”
    They’re in something, but it’s not “the know”.

  7. Not quite sure where to put this, but here you go…

    (Tali Sharot: The Optimism Bias)

    I assure you that somewhere between 11-12 min mark there’ll be something there for VREAA readers. =) (And other housing bears…)

    Enjoy!

  8. 4SlicesofCheese

    http://www.straight.com/article-686501/vancouver/women-go-it-alone-buy-their-first-home

    She is going to trade in a 800 dollar rental in the west, probably close to her work, for a 200k condo in Surrey? I dunno if that is a good idea.

    I found it interesting Rennie mentioned 50% of the buyers at the Marine Gateway development were sold to women.

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