Bear Exhausted By Tenacious Bullishness – “Over the long term real estate never goes down besides there is so much money coming over here.”

“Talking to a colleague. Her and her brother were looking at places in my neighborhood last night. He sold his place in the sticks and is now looking to move closer to the city. I asked her why doesn’t he just rent, “he feels that interest rates are going to rise and he wants to lock in a low rate.” Wouldn’t it better to sock away the money and wait for rates to rise, values to decrease and then buy, I asked. “Over the long term real estate never goes down besides there is so much money coming over here.”
The rent for my one bedroom is $1,550 and similar apartments are listed for $490k. meaning it would cost me almost $3,000 a month to own a comparable apt. — based on 5% down with a 5-year fixed at 4% with a 25 year amort.
I am so very, very tired of being wrong about Vancouver’s RE market. It appears that there is just no shortage of people who truly believe that we are running out land, that real estate always goes up and that everyone wants live here.”

Manna from heaven, at VCI, 1 Jun 2012 11:19am

“What do you mean you were wrong? Average price is down 12% YOY. It sounds like you were right.
Bears have been wrong so long they can’t recognize when they are right!”

WFT? at VCI 1 Jun 2012 12:15pm

32 responses to “Bear Exhausted By Tenacious Bullishness – “Over the long term real estate never goes down besides there is so much money coming over here.”

  1. “Bears have been wrong so long they can’t recognize when they are right”

    LOL, probably will be true but not yet. For the most part bears have been “wrong” in that prices are still too high. Most bears aren’t giving timelines, only end destinations.

    It’s like saying I know winter is coming but I don’t know when the first blizzard will be. I’m still right that winter is coming.

    • “It’s like saying I know winter is coming but I don’t know when the first blizzard will be. I’m still right that winter is coming”.

      depends on your definition of “winter”. I live in Vancouver. I agree that winter is coming but I don’t expect blizzard conditions

      • Really? Its June 6th and Grouse got snow.

        Prepare to be surprised, its going to be a long cold one.

    • Last night… It snowed in the higher elevations of the Okanagan.

      Seriously.

  2. Manna, buying now is akin to buying in Phoenix circa 2005-2006. Don’t give in to the Dark Side.

  3. “It appears that there is just no shortage of people who truly believe that we are running out land”

    I don’t believe we’re running out of land.
    I believe we “ran” out of land decades ago.

    • I’s all about availability of land in the area you wish to live. If you want to live in the West End, I agree, your argument is valid.

    • 4SlicesofCheese

      That must be why prices were flat in the 90s.

      • “That must be why prices were flat in the 90s”.

        a decade before these flat prices we had basically zero immigration. Vancouver was a backwater. You didn’t have to look that far back…we were not very far removed the 1985 and earlier sleepy backwater town with no tourism, no immigration, no jobs. Those conditions are now 30 years in our rear view mirror. Don’t you think Vancouver has changed the past 3 decades? Or are you still expecting to pay 100K for your Dunbar home?

      • “we were not very far removed the 1985 and earlier sleepy backwater town with no tourism, no immigration, no jobs”

        Friends visiting Vancouver have commented that not much has really changed in the past 20 years. In terms of rental rates, in real terms, they’re right.

      • 4SlicesofCheese

        One thing that has stayed flat, wages.

      • I looked at some statistics to test formula1’s statement. I think these tend to support the statement (that there was lower immigration 10 years before the 1990s), but there are some interesting nuances here. The rate of immigration from 1996 to 2006, a period which includes the beginning of massive price increases, was much reduced from that of 1986 to 1996. I’d love to see 2011 census figures that are comparable, but this is all I turned up.

        First this Stats Can page on the 2001 census: http://www.cic.gc.ca/english/resources/research/census2001/vancouver/parta.asp. A big increase in Vancouver CMA’s immigration population from 1986-1996 (ten years) and much slower increase from 1996-2001 (five years). Still much more population growth from immigration than Canadian-born people, though.

        Next this Stats Can page on the 2006 census: http://www12.statcan.ca/census-recensement/2006/as-sa/97-557/p29-eng.cfm. Vancouver CMA has a lot of foreign-born residents, and in 2006 was second only to Toronto among Australian, American and Canadian cities in that category (having overtaken Miami, L.A., Sydney, Melbourne). Note however that the rate of growth of immigrants had further slowed yet again:

        “The number of recent immigrants who chose to settle in the census metropolitan area (CMA) of Vancouver has declined for two consecutive censuses.

        “Between 2001 and 2006, an estimated 151,700 newcomers, or 13.7% of all new arrivals in Canada, chose to live in the Vancouver metropolitan area.

        “This was a decrease from the 169,600 individuals who arrived in Vancouver between 1996 and 2001, and well below the 189,700 who arrived during the early part of the 1990s.

        “Vancouver was the only metropolitan area of the three largest that experienced a decline in new arrivals during the past five years. Both Toronto and Montréal recorded increases.

        “The main factor in the back-to-back intercensal decline was a slowdown in immigration arriving in Vancouver from the Hong Kong Special Administrative Region, which has been the source of many newcomers in the late 1980s and early 1990s.”

        In total, I don’t see these as supporting immigration’s role as the major driving force behind price increases. The time periods don’t coincide very well. However, I would certainly concede that immigration has been very significant to population growth and that it can have an effect on real estate prices. I just don’t think it’s the driving force for Vancouver RE prices that formula1 suggests.

      • For recent pop growth figures I have graphed them here: http://housing-analysis.blogspot.ca/2012/03/bc-population-growth-to-q4-2011.html

        Short synopsis: BC population growth has been trending downwards for a few years now.

        I believe this is a large part why sales are down, inventory is elevated, prices are showing weakness.

  4. lozza land to build houses on Van Island. Same great, West coast climate. What’s stopping you? no bridge? Right.. I know.

      • Commute! oh right, bridge again.

      • There are those who live on the islands and have small places in the city they use during the week, commuting back only on weekends.

      • Building fast ferries was designed to 1) provide jobs, the impetus of a new industry, 2) allow daily commutes. Can you imagine if this had actually worked? We wouldn’t have had a Vcr housing bubble nearly as big. Ahh well….

      • If the BC government had swallowed the fast ferry pill and continued to invest in shipyards it might have landed the large federal shipbuilding contract instead of a paltry second prize.

        Nah!

  5. Village Whisperer

    Actually (weather wise) it reminds me of predicting the huge winter snowfalls here.

    Environment Canada has ranked Vancouver in 3rd place under the category of “Lowest Snowfall” among 100 major Canadian cities. But Vancouver’s coastal climate has nonetheless allowed it to be ranked in 59th place under the category of “Most huge snowfall days (25 cm or more)”, placing it well above cities like Calgary and Toronto.

    We all know another huge snowfall like in 2006 or 1998 is coming. Everyone thought we would get another last year and the year before.

    Because of those wrong predictions, a great many will not be prepared when the next huge snowfall comes, regardless of the warnings from Enviroment Canada.

    • If housing bubbles were only as simple as not having the right tires and experience pulling out of a skid. With housing crashes the “snow” comes and stays for years.

  6. Tenacious Bull? What better expression to describe the energy of Jupiter at 29° Taurus? Jupiter is the money planet, Expanding everything it touches, reaching its culmination at the Critical degree at the end of the Sign. However! on June 12 it enters Gemini, its detriment (0pposite of Sagittarius, the position of ‘dignity’). Suffice it to say, the largest planet rules the largest organ (liver), so careful how much yo drink (consume) the next 5 days, could be a hellova hangover… Credit expansion is precariously unfavorable after this.

  7. Well, it is getting exhausting. “Canada watchdog eases proposed mortgage guidelines.”
    http://ca.reuters.com/article/businessNews/idCABRE8551BS20120606

  8. Thai-born Chinese Canuck

    Hot Asian Money can’t last forever. I am in Bangkok, Thailand, now. There are signs that RE boom in Canada would not last either.

    1. Most of Asia is cooling rapidly because of Europe. May 2012 reports Thailand’s export figure fell sharply while inflation eats in people’s pockets. Luxury properties here is having a hard time selling. I believe this is the case in Mainland China as well.

    2. Yesterday a leading business newspaper, Krungthep Turakij or literally Bangkok Business, ran an ad page about Melbourne RE Mini Expo in a luxury hotel here in Bangkok. This sounds eerily similar to what occurred here before the 1997 Asian Financial Crisis, in which parades of Australian RE companies came to Bangkok to court gullible Thai nouveau riches to buy luxury REs in Australia. Thailand is generally a poor country with very few rich people. So why are these Aussies suddenly interested in selling luxury REs to Thailand? Why are they not focussing on China, which boasts having a much larger number of billionaires eager to emigrate? Australia is a good indicator because it shares a lot in common with Canada.

    REs in their home countries slow, so does the HAM’s hunger to own properties overseas like Australia and Canada.

    Don’t count on HAM.

  9. “In the long term real estate will always be up.”

    True. But to see the peak again could take 20 years.

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