“…the schadenfreuden stories on Vancouver Real Estate Anecdote Archive. Always good for a bitter laugh.” – Bill Lee at francesbula.com 26 Nov 2012
“I never did give anybody hell. I just told the truth and they thought it was hell.” – Harry S. Truman
All the very best for the festive season to all readers, and wishing you all a fine, peaceful 2013.
Regular readers know that we foresee challenging times ahead for the Vancouver RE market. This opinion is not a wish, it is simply the result of an analysis of all the available evidence. And it is most definitely not to be confused with a desire for bad things to befall anyone in our community.
The speculative mania in housing (2003-2012) has been detrimental to Vancouver. It has misallocated human and financial capital, and distorted the economy of the city. It has inconvenienced many, and, unfortunately, in the end, it will have financially and psychologically hobbled a good number of citizens. This outcome is inevitable. Again, please don’t confuse this observation with a wish, it is simply part and parcel of a spec mania: a messy resolution has been ‘baked in’ since prices hit the afterburners in the mid 2000’s. When asset prices are artificially inflated by a chain of ever increasing debt-financed transactions, there will always be a large group left ‘holding the bag’ when it all runs out of oxygen.
There is, unfortunately, no other way things can resolve, and nothing that can be done to significantly ameliorate the bubble’s consequences. It is too late for that. The problem was letting it develop in the first place; and not allowing it to unwind earlier.
Anybody who is wishing for soft-landings, or hoping that some form of kindness will somehow allow for a resolution that involves no damage, needs to answer this question: Who do I expect to do the buying that will let everybody down gently? Who do I expect to step in now, borrow (or ‘donate’) large sums of money, and agree to purchase properties that are still woefully above their fundamental values? (and thus exposing themselves to very large losses ahead). Who do you suggest should be the sacrificial lambs?
Those wishing for fantasy bullish, Pollyanna-ish outcomes may be well-meaning, but they are simply ignorant of bubble market dynamics. You can’t simply call the game off and hope that everybody wins; it doesn’t work like that after years of ever-increasing over-extension.
All that said and done, we hope that readers fare as well as possible. All citizens, owners or not, will feel some of the economic effects of a RE downturn. Non-owners will suffer less direct personal impact, and there are a good number of owners who will survive the RE bear market with just a scratch or two. We are most concerned about modest net-worth households who have almost all of their savings in their homes; often with leverage. We know it is a painful fact that they can’t all get out ‘whole’, but we fear for them nonetheless. Particularly vulnerable are those close to retirement who are relying on the value of their homes for a comfortable future.
We hope that Vancouver can find a way to make the transition from overvalued market to a fairly, and sustainably, valued market with as little damage, and as peaceably, as possible. In fact, for us, the ‘peace’ bit is paramount. Economic stress puts groups at risk of highly-charged fractures, and we sincerely hope that as a large and diverse group we’ll be able to avoid scapegoating, in-fighting, and division.
So, to emphasize: Bears care, too. They may come across as grumpy and (per force) contrarian, but they care as much for family, friends, neighbours, and fellow citizens as anybody else. Sure, the occasional bearish commenter will express the opinion that they will gain pleasure from the losses of speculators, but this is far from the commonest position. The very few Vancouverites who have seen this speculative mania for what it is most commonly express genuine concerns about the potential consequences for themselves, their families, and their fellow citizens.
“I conceive that the great part of the miseries of mankind are brought upon them by false estimates they have made of the value of things.” – Benjamin Franklin
“I think you’ll need another sidebar category to capture the mounting “why do you hate families/wish misery on others?” accusations that are going to come in increasing numbers. Long time bulls – and new visitors to this site – may trot that one out more and more, accusing you and posters here of schadenfreude, hating home “owners”, etc. Even if it doesn’t happen here, mind-bending statements in this vein will increasingly pop up elsewhere and be worth collecting. May I humbly suggest a sidebar icon with a picture of Helen Lovejoy and the words “won’t someone PLEASE think of the children?!?” to link to the post you ultimately create addressing this topic?
Past even-handedness will matter little to desperate people who will misinterpret many sentiments expressed here. The archive will be useful to a subset of these people who are willing to be taught the historical mechanics driving this bubble.”
– paraphrasing of Royce McCutcheon at VREAA 17 Sep 2012 8:50am [We’ll call such a sidebar ‘Bears Care, Too’ -ed.]
Nem -> That final segue came as a bit of a … surprise.
But, yes: everyone.
All the best to you and yours, Nem, for the season and for 2013.
Many thanks for all your invigorating contributions here.
haha! That is one of my favourite lines ever. I used to quote it often when the word “everyone” was called for.
Oh, right. Merry Christmas, EVVVEEERRYYOONNEE!!
hey bill lee..it make make me laugh too. btw does Vancouver have anything that real cities have?
Vancouver is a fine city.
What’s Really Good About Vancouver?
Absolutely vreaa. Depending on what you value in lifestyle, Vancouver is one of the nicest in Canada or even North America.
As much as I get pleasure out of poking fun at the “Best Place on Earth” mentality and upsetting life-long Vancouverites, I actually think very highly of this city. There just are some things that are too broken to make me want to stay and establish a career and/or family here. There are about a half dozen other cities in North America that I’ve spent enough time in to consider them just as “liveable” as Vancouver, if not more so, each with their own strengths and weaknesses.
Merry Christmas, vreaa, and to all readers of your blog. And thank you for the considerable effort you put into hosting this space, and keeping it more or less civil and interesting.
And which would people prefer — comments that are occasionally guilty of schadenfreude, an emotion that could very well disappear if the commenter personally knows the people suffering, or the continuous stream of disinformation from those who are supposed to be dealing ethically with the public? Of the two, which is the more cynical?
And, agreed, of course, regarding the location of the cynicism.
Hey, some of my best friends are homeowners. Merry Christmas, and a happy and prosperous New Year.
Mine too; I try to forgive them
Thanks Ralph, for all your contributions here.
I’ve watched hundreds of people over the bubble era smug and condescending. I have no trouble watching them get financially ruined, especially the ones whom I went to great lengths of trouble to consider what a bubble is. As a result I was laughed at and ignored. I say, bring it on… This bear does not care. I do care about how the speculators have ruined our economy and surroundings which I will be living with regardless.
We understand the emotion.
Same since 2006…
I no longer care what happens to them…
Basic compound math predicts and wins every time…
But as we are sold…
I will sit with a good coffee… and watch the tears and shock… now…
As they realize that they are…
“Poorer than they think”.
And wait for the right price on something interesting…
This will not bode well for the special children…
I continue to warn friends passively on Facebook, every day. They close their mind at their own peril. More than anything, this crash will be a lesson in critical thinking and herd mentality for those hit the hardest. Bring it on.
I hope that real estate prices crash hard in Vancouver because that is the best thing that can happen. Lower prices are good. Less debt is good. Truly affordable housing is good.
Only in Vancouver’s bizarro world can all this be twisted into something “bad” and “wishing misery on others”.
True misery is being so deep in debt that you can’t move, you can’t quit your job and you have to spend hours every day commuting to work, because anything closer is way out of your price range etc…
A 50% crash would barely return our market to sanity.
Agree regarding the benefits of fair value housing and regarding Vancouver’s distance from sanity in this regard.
All the best to you too, bubbly, and thanks for all your comments on these pages.
Happy Holidays to everyone!
Off to Asia for a month!
Back in time for New Years sale boost!
Are you going to China, Cheese? Keep us posted.
All the best, 4Slices.
Safe trip; tell us about it.
Thanks for conversing with us all here.
Happy Holidays everyone.
My one comment is take it easy on home owners, not all are smug. I have just sold (July) but I remember, well remember now, not even looking at what was happening with the market… we were just living and doing what we thought we should be… yes I agree the market has gone way out of whack and yes I’m glad to be out of it… but get on the speckers, not your ordinary people trying to give it a go.. just saying…
Rainman -> Thanks for the post.
You’ll notice that we do know that homeowners are not all devils incarnate.
BTW, one of our concerns here has been that innocent homeowners have been unconscious ‘speckers’ … you’ll see that theme recurrently on these pages… see the ‘Spot The Speculator’ sidebar.
All the best for 2013.
I would also like to wish a Merry Christmas and send best of the season wishes to my many friiends and fellow posters on this site who have done such a tremendous job dissecting our bubble this past year.
To Vreaa: Your contributions and many commentaries have been outstanding and have made this site one of my absolute favourites on the web. I hope you will have the energy to keep at it next year although one might wonder what more can be added to the discussion after so much thought and analysis has already gone into the daily articles!
I will wait for more. Until then, have a great year everyone. See you in 2013.
Farmer -> Many thanks for your kind words, and for all your contributions to the discussion at this site. Much appreciated. All the best for 2013.
Merry Christmas, Farmer
Many thanks Whisperer and the same good wishes for you this holiday season. By the way, I think I found the source of my problems but I don’t know yet if I can fix it. I am using a device that is routing through China Telecom via Africa and it is they who are blocking so many of my regular sites……(you might have crossed them at some point, Vreaa is still up and running though).
[ironically, the mod filters decided to hold back the above comment by Farmer! As always, released once the log-jam spotted.]
“I deplore your truth handling abilities” – Side Show Bob
Merry Christmas, VREAA. Thanks for all information, the thoughtful analysis and creating a platform I find useful and, unexpectedly, entertaining. To the future!
Thanks, zbig. And thanks right back for your site, too; I enjoy it immensely. Great visuals, and wry humour. Keep well; keep in touch; have a good 2013.
gotta love the 2 degrees and constant freezing rain…….what a paradise, everybody in California, Hawaii must be flocking to world-class Vancouver
Disloyal cadre, there is a .. I believe the denizens of this treaty port call this game played on ice “hockey” .. on television right now – perhaps the disloyal cadre can amuse yourself with this spectacle, rather than call attention to reality here?
The game is vs. the Germans, of course..
N.O. #9000 !
Please report to superior for special poorly manufactured decoration of honor for uplifting performance of prior year!
We trust that 2013 smiles on you!
Watching the hockey game, too.
HomeHardware commercial comes on “Homeowners helping Homeowners”. What about the renters? Don’t we need help and advice when we buy a light bulb?
This again shows the low regard for renters in this community.
At a party, when you mention that you are renting, everyone suddenly moves back a few steps, as if you have some contagious disease.
Can’t wait for the “Revenge of the Renters” coming to a theater near you.
They run from you now….later they will be sleeping on your sofa.
I welcome a mighty reckoning in the real estate market in Vancouver and the Lower Mainland. It’s not only necessary but deserved.
It’s needed for the restoration of reality and the assertion of the market and thus bring on more affordable housing and price stability. The people of Vancouver need that.
We need the assertion of economic justice, meaning that the fools who paid too much and borrowed too much should go to the wall. The nose-bleed prices paid for crummy housing on the “I’ll sell it to a bigger fool” basis of speculation were stupid and stupid deserves to be bankrupt and foreclosed. This goes doubly for the doubly stupid HELOC spenders. The bad example has value that others may learn from.
So… let’s have a thorough rationalization of the real estate market along with a lot more rationality. And please, no taxpayer funded bailouts.
Bill D -> Thanks for the comment.
We agree with the gist of what you’ve said.
It’s a pity that anybody has to “go to the wall”, but, as it is necessary, it’s best that it happens to those who have been greedy. Unfortunately, there will be ‘collateral damage’.
We are also deeply against “taxpayer funded bailouts”. In fact when we ourselves ask the question “Who do you suggest should be the sacrificial lambs?”, we harbour fears that the answer will be “everybody”.. as in “spread the pain around”.
I too see your point Bill. But would you feel the same if it was your own parents who lost the bundle and your inheritance vanished forever into the ether?
That’s a somewhat cynical question, Farmer. What is your point?
It is one thing to welcome a “reckoning” but quite another when it is your families money that goes up in smoke. Careful what you wish for. Would you not agree?
Thanks, vreaa. Happy Holidays.
Thanks to you, too, El N., and for all your contributions to discussion here; it is much appreciated. All the best for the new year.
One of the more annoying traits of the back sides of bubbles is the emotional mindshare financial suffering reaps on my mind, leeching compassion away from more worthy pursuits.
The best I can do to cope is to feign interest and, truly, think of the children… as I volunteer at BCCH.
So to those accusing others of showing no compassion for those who got into trouble over a little bit of money, please just go away. You don’t know.
Yes, that will do it.
The stuff we discuss here is but a subplot for the really important stuff, isn’t it? I think we all know that, despite the fact that we have given this particular subplot lots of time. It’s demanded it, by simple virtue of its current anomalousness. But it’s just a subplot nonetheless.
If you and yours are healthy, and you have the broad basics, you pretty much have all you need to live a satisfying life.
All strength to you, jesse, for doing that kind of work.
And many, many thanks for your contributions to all of our discussions, here, and at other sites. Much appreciated. Have a good new year.
So my wife was working yesterday in one of the Chinese malls in Richmond (yes on Xmas). Anyway she sells clothes and she told me she just made 200 bucks in sales. Her boss said that that was way worse than previous years Xmas and that in general, sales have been down a lot this year. I guess Canadians are just stretched to the max, or the wealthy Chinese have just stopped coming and spending.
Happy holidays to all!
I forgot to say…
vreaa, for a most thoughtful blog…
… and everyone who comments here, thank you as well.
An excellent close to the year…
We hosted Christmas dinner at our new rental last night (we finally rented a place big enough to entertain the whole family). Most were suprised at how much we were able to rent and saw clearly (for the first time) that it truly is cheaper for us to rent than buy. It was really odd to have myextended family of super bulls finally accept my position. What was awkward was when they started asking advice such as “what do I think about Whistler” as my sister and her husband own up there. Unfortunately I just responded that my position hasn’t changed, sell everything you don’t live in which is unfortunate as the response was “we can’t, prices have dropped below what we owe…when do you think they will recover?. Bears do care, I’ve been warning of this exact predicament for years and now that it has happened they are asking for help too late. My suggestion now is not toward profit maximization but loss mitigation and suggested they talk to a proffessional about debt consolidation and consider deleveraging even if there is a small loss as putting the inevitable off could result in something much worse.
Happy boxing day!
I understand your sentiment here. It was OK for bears to advise strongly to sell when the opportunity was ripe but it is not so easy a task when there is losses involved. We are getting near to the “no comment” stage in my opinion. What can possibly be said now anyways? I just bite my tongue and keep quiet. It is a pointless exercise and nobody will love you for the words of encouragement after the fact anyway. They will always feel they lost money and it was not their fault.
The only time I have compassion for the financially illiterate is on evenings, weekends and holidays.
Merry Christmas everyone!
who’s financially illiterate? and you are financially literate
I tell all my Patients who become sick from drinking too much RE Kool Aid.
Take two Aspirins and call me in the morning
I’m financially illiterate. That makes me sad. No love from Cyril… (except during free cell phone calling hours…)
Maybe I missed it, I don’t know, but are you going to have a prediction for 2013 thread? Remember WBWYCR2013? He figured this was the year. Will he be right?
Anyway, I’d love to see some predictions. I know where I’ll put my $$$ (no drastic changes, and certainly no marked increases this year, but nothing bringing us back to anything fundamental, let alone below those levels).
Merry Christmas and Happy New Year’s to all!
My predictions for 2013:
Sales remain weak; Prices start dropping in earnest.
By how much, who can be sure of short term fluctuations?: 10%? 12%? 15%? 20%?
My longer term, bigger picture prediction for 2010-2019 remains that ‘A Real Estate Bear Market Will Be Vancouver’s Defining Social And Economic Event’. Peak to trough price drops 50%-66%, real.
Rob, you want predictions. Here are predictions, but I’m not sure if you can handle predictions.
Supply will dictate price, so here we go:
January 2012 total inventory was 10,700.
Dec 24th total inventory was 14,700.
Beginning Dec 27th, I predict that new listings will be about 100 a day, with about 10 sales, for a net of 90 per day. 90*30=2,700 net listings per month until about May, when sellers will give up and withdraw.
So, by the end of May total inventory will be at 14,700 + (2,700*5) = 28,000, compared to 16,000 in May of 2012.
Anyone care to challenge these numbers
I’m feeling conservative today, so my prediction for end of May inventory is between 18k to 20k. There will be still a lot of potential sellers waiting for a better market.
Vreaa ~ Thank you so much for your work and this little salon. This site really is an ongoing gift! All the best in 2013.
Many thanks, Absinthe; very kind. Thanks for all your contributions, and all the best for 2013 to you too.
Very interesting article @ Mish’s blog about China today: http://globaleconomicanalysis.blogspot.ca/2012/12/michael-pettis-on-china-reforms-ponzi.html
Part is about Chinese “Wealth Management Programs”, which often seem to be ponzi schemes in which a lot of people invested their life savings. (Some people may remember a story from ’90s Albania where similar schemes collapsed and the people took matters into their own hands, starting by looting the army bases. Similar schemes existed in every post-communist country)
Then there is this part about Chinese migration:
And then this:
VREAA, thanks for all your hard work to keep us so well-informed and amused, and for keeping it classy!
Your site provided my first voyage into the blogosphere, and it’s been an illuminating journey, thanks to you and various fellow passengers on The Good Ship VREAA.
Late to the party here. Many thanks indeed.
This blog has been an endless source of knowledge and entertainment. More than anything its a fantastic outlet for those of us feeling lonely in this often backwards city.
Thanks to everyone!
If anything this blog has been a welcome source of knowledge and entertainment… and reassurance that I’m not the only one who feels that Vancouver has lost its sanity.
Thanks for keeping the blog fresh with new content vreaa.
It would make a fine Greek Drama: the collective Hubris of a whole city, a small choir of bears pointing out the obvious, and of course: Nemesis waiting in the wing.
Merry Christmas and a Happy New Year everyone.
I’ve learned many things on this blog and other linked blogs. Thanks to all, and the blog writers of course — vreaa, jesse, whisperer, observer (and all those that I missed). I still consider myself financially illiterate, but at least I know what I don’t know (I think). =)
Christmas is that special time of year when we reunite with all sorts of twats we haven’t seen in about a year who proceed to condescend toward all poorly renters who did not ante-up into the real estate ponzi. This year was no different. Enough to gag on that damn turkey dinner.
So bring on the crash and bah humbug on the lot. Bears care – I care about seeing these smug mo’fo’s go down, baby. Please make this THE year! Then bring on Christmas – it’s gonna be payback.
Gee, I sound a little bitter in my last post.
Here’s the other side of the meltdown:
1. A friend bursts into tears around the camp fire because they’re loaded up on debt, living on the HELOC and her husband must go to Toronto for work while she stays here with kids (which means more costs and another 2 months of no income until the pay-cheques start flowing). Before you get too sympathetic, this couple has won the Vancouver housing lottery and their SFH has more than tripled in value to close to $2-million. House rich, cash poor, chose not to work much for last few years since prices kept going up on West Side.
2. Another friend expecting a second child in a few months decided not to list because their neighbour in the same complex listed and multiple places on their street are listed. They’re just going to sit tight for now….and live more compactly with the new baby.
3. A neighbour’s husband commutes to Edmonton each week for work (sometimes coming home on weekends, and sometimes having to stay….missing kid’s young years in the process). Oh yes, they own a place in both cities plus new car and can’t cover the costs. Trying to figure out what to do next (we all know the answer – they seem to struggle with it).
All are Gen Xers. I think Xers are going to really get nailed in this cycle – they loaded up on waaaaay too much debt.
Sad stories when it gets so personal – and so close.