Premature Bottom Call – “Vancouver’s housing sector may have hit its bottom with an improvement in home sales seen in October”

“Vancouver, British Columbia’s housing sector may have hit its bottom with an improvement in home sales seen in October”
Marc Pinsonneault, National Bank, Wall Street Journal, 21 Nov 2012

Added to our ‘Premature Calls Of Bottom’ sidebar collection. A steady stream should follow, over the next few years. – vreaa

[Thanks to Ben Rabidoux for pointing out this gem.
Ben is a national RE analyst whose posts at his blog ‘The Economic Analyst’ have been invaluable reading for those interested in Canada’s RE market. He is more recently working with M Hanson Advisors, ‘a market research firm catering to professional, institutional investors’. Ben tells me he is putting on a seminar regarding the state of the Vancouver RE market, next Wednesday, 28 November 2012, here in Vancouver. Details at http://www.realestate2013.ca%5D

29 responses to “Premature Bottom Call – “Vancouver’s housing sector may have hit its bottom with an improvement in home sales seen in October”

  1. There are a few other bottom calls identified over at vancouverpeak.com
    http://vancouverpeak.com/groups/general-chatter/forum/topic/bottom-call-thread/

    Feel free to archive! Open data are open.

    • Not surprisingly, some enterprising lads in HogTown are garnering rather better reviews for their ‘BottomCalling’ events than the NationalBank’s economists are for theirs… [WARNING: PG13 Entertainment for GentleMen]

      http://tinyurl.com/ctvturv

      [NoteToEd: I told you the Breweries would do anything to boost consumption/maintain market share during the NHL LockOut. Also, I thought YeOldeAntiqueShoppe’s proprietor could really use some cheering up.]

  2. They have to protect their investment, what else are they going to say..They will say this all the way to the bottom..Anyone who listens to them need their head examined. The economy is going into a death spiral, WAR, MASSIVE DEFICITS, WEATHER CHANGES, DEBT, UNEMPLOYMENT..how can this be a bottom? Use your common sense, BUY GOLD and SILVER..ONLY.

  3. Let’s hope the premature bottom calls will be coming for at least as long as the premature top calls by bears in the past few years.

    • Fair point. But so what if that turns out to be the case? The bears will all have been correct in their major call, that of an overextended market that became more and more preposterously overextended.
      BTW, our spec mania began in 2003, at the very latest.

      • True. The bears (including me) are also 10 years older since the madness began. And 6 years older since the first premature top calls – at least as I remember them from 2006. The big premaure top call was, of course, in 2008.

        So there are costs (financial and non-financial) to incorrect calls on both sides. Bulls, if they are wrong, will miss their chance to sell at profit and may be unable to do so for years. They may end up ‘stuck’, immobile, with strained relationships, etc. Bears have already lost over half a decade… this may sound a bit dramatic, because life doesn’t stop just because you don’t buy a house. But there are still consequences…

      • Bears will not have lost financially. Yes, the spec mania has been greatly inconvenient to them; that’s part of the beast. Living through all this was bizarre; you can’t choose your time to live (you can, of course, choose your place to live, but that’s another discussion). I wouldn’t quite call it having “lost” this time though, would you? Life has still gone on for the bears, despite the duress.
        It’s the bulls who will be slaughtered by the collapse; all late comers, all those who are overextended, and even those seemingly conservative owners who were relying on the value of their RE for their future financial health.

      • Hmmm, I agree with most of what you wrote, but I think this could be a topic for bigger discussion. 6 years of incorrect top calling can not be without consequences. The years will add up to the point where prices are back to the level of the original top calls. How long until we are back at levels from 2006?

        Btw, my good friend’s girlfirend broke up with him recently, because he didn’t want to “settle down” (=buy a house). My friend has been waiting for a crash since 2008. We like to talk about bulls having various problems including marital stress because of excessive debt, etc. But the bubble is clearly straining relationships on both sides.

      • bubbly:
        “my good friend’s girlfirend broke up with him recently, because he didn’t want to “settle down” (=buy a house)”

        The guy has just dodged a bullet I think.

  4. Not even close to a bottom. I’d think that most of these premature bottom calls are really just wishes of the original speaker. Have we even shaved off 1 or 2 % from our debt-to-GDP ratio in Canada? Maybe Vancouver has… People have a hard time understanding that when consumers start to deleverage, and were talking years of deleveraging not a month or two, this is when its truly going to hurt the economy.

  5. Hard to imagine where the money’s going to be coming from to keep up prices. We are far from the bottom.

  6. Don’t you think it’s premature to call the “bottom call” premature?
    Well OK this one is so obviously wrong it is worthy of being headlined. Whoever is paying this guy for analysis should really review their options. They’re simply dead wrong that October is the bottom.

    • We won’t really know until spring selling season.

      • Real Estate Tsunami

        Bubbly, agree.
        Easter will either be the death or resurrection of the RE in the Lower Mainland.

      • I think the spring selling season is going to be stronger than right now. If I were to posit some scenarios with probabilities they would most likely be:
        1) Prices drop (<1%) through the spring (20%)
        2) Prices stay flat (-1%–1% through the spring (40%)
        3) Prices increase slightly (1–3%) through the spring (35%)
        4) Prices increase significantly (3%+) through the spring (5%)

        We'll have to see — I'll probably be modifying my guesses before the start of spring — but I am not ruling out a "crash" (<-10% YOY) in 2013. Low rates and high house prices are a bit of an enigma and it's hard to find decent parallels in history. 😕

      • Jesse/YVRHA – Please clarify: do you mean you put a 20% weighting on a price drop of greater than 1% by the spring?

      • Real Estate Tsunami

        YVR,
        Your model right now predicts a slight increase in house prices during the spring.
        I believe that during the next 6 months the RE market in the Lower Mainland will witness a Black Swan or Long Tail event.
        Meaning, it will not be the status quo. It will either be an extreme downward correction or a significant influx of offshore buyers coming back and driving the prices to new heights.
        My money is on the first scenario, because I believe that a 12 year run-up on house prices in Vancouver (without fundamentals) cannot be sustained.

      • In an obliquely related fashion (and I’ve mentioned this before), I wouldn’t be surprised if the relationship between MOI and price change became distorted, and departed from the relatively linear relationship that it has demonstrated thus far (as recorded by Mohican and Jesse).
        All it would take for that to happen is for sellers to start liquidating at lower and lower prices without a proportional increase in inventory. This could easily occur if buyers evaporate.
        Such a change isn’t necessary for a crash to occur.

    • We will confidently be calling premature ‘bottom calls’ exactly what they are, premature bottom calls, as they happen, all the way down… it’ll start getting tricky at 30%-off, where we’ll expect a temporary bounce. But even those bottom calls will prove to be false, as we later drop below 50% off.
      None of this will be a “crash”, of course.
      😉
      We may well lose all that imaginary value at a leisurely pace, over the better part of the rest of the decade.

    • BTW
      Bears who are longer term prospective buyers (people who actually would like to purchase a home, you know, to live in (!)) won’t have to accurately call the eventual bottom, fortunately. In fact, we don’t expect anybody to reliably call the eventual bottom, all present company included. The point is that people will only have to buy in the vague vicinity of a bottom to do okay. Markets are like that, you only have to vaguely get it right to do far better than average. This is surprising; you wouldn’t think that if you read ongoing in-the-trenches market commentary (RE or otherwise), but, there it is.

  7. Minister of information

    if the beer fiasco/NHL lockout/strike tells us anything, it’s the power of the media to generate spending. Every positive spin on RE is a cuddle to the Buyers Remorse market we have now. If it helps, I will gladly hug anyone with a mortgage or debt otherwise. There, there, everything will be ok… pray for hyperinflation, pray, pray… debt will be market down by hyper devalued currency.. pray… pray deeply… deeply..

  8. it’s uncanny how the anecdote comments tend to devolve into ‘blame’. But Shelley is correct. It’s the government’s fault. Problem with that is he doesn’t take us behind the closed doors. So, it’s another story that takes up many words and provides little value.

  9. Pingback: “My good friend’s girlfirend broke up with him recently, because he didn’t want to “settle down” (buy a house).” | Vancouver Real Estate Anecdote Archive

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