“I have been contacted by two of my realtor friends in the past week both proclaiming that the market is turning and that this is a good time to buy.”

“I have been contacted by two of my realtor friends in the past week both proclaiming that the market is turning and that this is a good time to buy. One of them even mentioned that interest rates will be rising this Friday. When they tell me this I argue that they should look at the ten year average. Sales are still around 20% lower than the ten year average and this is with major banks advertising mortgate rates under 3%. If you compare stats between spring 2012 and 2013 it is like comparing chicken manure and cow manure. Yes cow maure is better than chicken manure but it is still manure. One of them had the audacity to say: “You better get in now I bet you five years from now people will say that Spring 2013 was the real estate bottom.” Hearing this I had to refrain myself and asked him to google “Asset bubble graph”. Where we are now is called the “Return to ‘normal’ phase aka “bull trap”; and guess what comes after next? As a matter of fact the Vancouver real estate market is following the graph quite closely. Never bet against human nature. I may be wrong but I highly doubt it. I think we will know for sure by this time next year. Unlike most bulls I know, I am putting my money where my mouth is. I am not buying now even though I have a down payment ready and could afford the mortgage without straining myself. In terms of real estate it will be an interesting rest of the year.”
Waiting to exhale at VCI 7 June 2013

18 responses to ““I have been contacted by two of my realtor friends in the past week both proclaiming that the market is turning and that this is a good time to buy.”

  1. Craig Sterling

    Does anyone know what the real-terms (not nominal) total decline is as yet in Vancouver? For everyone’s reference, the “bull trap” phase in the UK happened after a 15% real terms decline. Outside of London (UK), prices are now down 38% in real terms (ie with inflation added in)….Craig

  2. Craig Sterling

    Sorry and should have added that UK HP outside of London continue to decline coming up for six years after the initial crash in August 07…

    • Depends on area: closer to Vancouver has generally gone up more than other areas
      Depends on dwelling type: SFH has gone up more than condo
      Depends on your starting point: 5 year returns are different from 3 year returns.

      Taking the 5 year return for Greater Vancouver and assuming 2% inflation, using MLS-HPI:
      5 y nominal 5 y real 3y nominal 3y real 5y CAGR 5y real CAGR 3y CAGR 3y real CAGR
      GV composite 5.4% -4.727% 3.5% -6.4% 1.1% -1.0% 1.153% -2.2%
      GV SFH 14.9% 3.9% 9.4% -1.1% 2.8% 0.8% 3.0% -0.4%
      GV TH 1.5% -8.3% -0.1% -9.7% 0.3% -1.7% 0.0% -3.3%
      GV condo -2.4% -11.8% -1.5% -11.0% -0.5% -2.5% -0.5% -3.8%
      VW composite 9.9% -0.7% 6.2% -4.0% 1.9% -0.1% 2.0% -1.4%
      VW SFH 29.9% 17.4% 16.2% 5.0% 5.4% 3.3% 5.1% 1.7%
      VW TH 7.1% -3.2% 3.6% -6.4% 1.4% -0.6% 1.2% -2.2%
      VW condo 0.9% -8.8% 0.7% -9.0% 0.2% -1.8% 0.2% -3.1%

      I know there’s all this talk about “soft landing” and all that, but look at the numbers: we’ve been in a “soft landing” for five years now. Bonus points to anyone who can determine how long a 20% real drop (a figure cited by TD for national drop I think) will take at various growth rates.

      • oops error on the 3y: use this one:
        5 y nominal 5 y real 3y nominal 3y real 5y CAGR 5y real CAGR 3y CAGR 3y real CAGR
        GV composite 5.4% -4.727% 3.5% -2.6% 1.1% -1.0% 1.153% -0.9%
        GV SFH 14.9% 3.9% 9.4% 3.0% 2.8% 0.8% 3.0% 1.0%
        GV TH 1.5% -8.3% -0.1% -6.0% 0.3% -1.7% 0.0% -2.0%
        GV condo -2.4% -11.8% -1.5% -7.3% -0.5% -2.5% -0.5% -2.5%
        VW composite 9.9% -0.7% 6.2% 0.0% 1.9% -0.1% 2.0% 0.0%
        VW SFH 29.9% 17.4% 16.2% 9.4% 5.4% 3.3% 5.1% 3.0%
        VW TH 7.1% -3.2% 3.6% -2.5% 1.4% -0.6% 1.2% -0.8%
        VW condo 0.9% -8.8% 0.7% -5.2% 0.2% -1.8% 0.2% -1.8%

  3. With “friends” like these, who needs enemies?

  4. RE guys never lie….so it must be true.

  5. You know what, ED? I can already predict Mel Gibson’s response to that sort of ComeOn…

  6. I still do not believe Vancouver will have a very big crash mainly because of the NETG factor…

  7. “Nowhere Else to Go”.
    Many people are stuck in Vancouver, they do not want to endure brutal winters elsewhere in Canada (shoveling snow out of your driveway is not fun) even if there are better economic/career opportunities and they do not have the right skillset to move to the US.

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