“Vancouver RE Balloon Pricked; Median Price Detached Home Down >$500,000 to $1.7 million; Prices Need To Be Slashed”

Strong signs are appearing that Metro Vancouver’s real-estate balloon has indeed been pricked by China’s heightened capital controls.
Demand for multi-million dollar dwellings in Metro Vancouver is falling. “All the high-end stuff is sluggish,” says Vancouver realtor-analyst Steve Saretsky.
Sales volumes and prices on detached houses are especially dropping on the west side of Vancouver, in Richmond and in West Vancouver, where Mainland Chinese buyers had been active buying and building mansions.
Real Estate Association of Greater Vancouver figures show the median price of a detached home is down more than $500,000 since February, to $1.7 million.
Veteran Canadian real-estate data analyst Stephen Punwasi also has little doubt “Chinese capital is having a tougher time getting out of China” since leaders introduced tighter controls in January.
“Vancouver locals selling $3 million bungalows are going to have trouble finding an alternative to foreign urban land buyers, so prices need to be slashed,” Punwasi said.

– from ‘Is China bursting Vancouver’s housing bubble?’, Douglas Todd, 6 Oct 2017 [hat-tip to ‘The (indefatigable) Auteur’]

Pretty strong stuff for the Vancouver Sun.
This must give speculators (all buyers) pause.
23% down in 6 months? Gee.
Will anybody buy at these prices if they anticipate/fear future flat or decreased prices? We’d guess not, but we’ll have to wait and see how many “bargain hunters” step up to “buy the dip”.
Please see the last post for our discussion of why this is arguably an important juncture.
– vreaa

PS and BTW: The Auteur also kindly referenced a G&M article on how the BC NDP has essentially been petrified when it comes to promised housing action; in this regard we’d say this: No government can legislate or plan BC out of a gigantic speculative bubble in housing prices. There is no way to do that. Prices have become way too far removed from those determined by simple utility. The only way out is by a price crash (with no bailouts or any other silliness). That will solve the problem for a generation.

81 responses to ““Vancouver RE Balloon Pricked; Median Price Detached Home Down >$500,000 to $1.7 million; Prices Need To Be Slashed”

  1. So the support line that was showing on the previous thread image (of detached homes) has no doubt been breached to the downside and we therefore have a technical failure.

    Do you have an number for detached homes VREAA? Kind of curious to see it on the chart as well although I think we have to wait for the board to update its chart.

    And a price drop of 50,000 a month for ten months since February is pretty ferocious. I’m just catching up here again after an absence but was everyone already pretty much expecting this result today?

    The chart above incidentally displays a very clear technical failure with major support not coming in until prices fall to the million dollar range. That would imply a further drop of 700,000+ dollars over the next 18 months or so.

    Hell, it almost sounds affordable.
    ———————————————
    How you people been by the way?

    • Good thanks, and thanks for the comments here over the weekend.

      I think ave detached home is now at about $1.62M
      There are about 6000 on the market.

      • Many thanks and good to hear you are well.

        I do think we have a technical breakdown on that chart. Who really knows for sure though. Even I am unwilling to make any serious prediction about Vancouver RE anymore since it has clearly gone beyond the pale and entered the world of the irrational.

        It is far too late in the cycle to chase prices too so waiting is the only choice for all those who got left behind. A shame really. It’s nonsensical for guys like Fred to call anyone bears in this kind of environment when non-participants are more akin to victims of an economic accident.

        What he is doing is similar to blaming a pedestrian for being hit by a runaway car piloted by a drunk. It’s a blame-the-victim approach which puts me off because of its arrogance.

        Nobody normal goes out on the road planning to be struck and injured by a car anymore than a normal person would have avoided buying housing had they known how far out of reach it would become.

        Looking forward to your next post. Keep up the great work.

  2. As an aside, if prices did fall back to a million average that would be an almost perfect .764 fibonacci decline based just on what is visible on the chart. Probably not helpful though since I can’t see the prices that preceded it and I can’t remember them anymore either!

    Whatever the case, I would greet this correction with a sense of relief. The technical failure is ominous though for anyone who has bought in the past few years because it warns the declines are far from over.

    Buying now is surely the equivalent of catching the proverbial falling knife.

    Do not shed tears for the greedy though.

  3. So….buy gold? LOL!!!!!!!

  4. Probably nobody here really cares (since there does not seem to be much life in the place anymore) but an odd thing happened on Friday. What we saw was a massive selling on strength of GDX which I though was pretty weird since gold is setting up to turn bullish.

    But then it occurred to me the reason must be that stock markets are about to turn down if the smart money was distributing and bailing out. The total net selling came in at 170 million which is a pretty damned high SOS reading.

    Selling on Strength Report
    http://www.wsj.com/mdc/public/page/2_3022-mflppg-moneyflow.html?mod=mdc_leader

    In fact it was the heaviest selling of any issue during the day but you would not have known by price since bulls were buying up stocks almost as quickly. Anyway, to make a long story short, if gold is primed to rise but investors were dumping GDX in volume it can ONLY mean that they expect stock markets to get hit early in the week.

    And that makes sense as gold rises when markets fall but miners can also tumble in spite of gold going up if the downturn is fierce.

    Just something to keep in mind.

    I’m short NASDAQ for Monday.

  5. I do recall this was once a very busy site full of great ideas. Are the resident bears all in hiding now and just collectively holding their breathe hoping that the end has (finally) arrived for Vancouver’s unprecedented housing price bubble?

    Or have you all become buyers along the way having sniffed up the overpowering fumes of greed and are now kicking yourselves in the nuts having realized you were right all along about the stupidity of this speculation but regretting falling into the same trap as everyone else?

    I don’t suppose the idea of future inflation and steadily rising interest rates will be much comfort to most here then because it means that despite feeling miserable now, a stagflationary future of rising commodity prices and flat incomes will eviscerate what little discretionary income you still possess and may even send some of you over the edge.

    But that’s the future and there isn’t anything we can do about it now.

    Sometime in the next 12 to 18 months we will finally see gold prices find a bottom at the end of their 7-8 year bear market cycle. As prices begin to rise again in the commodity sphere what we should expect is that our buying power will decline. And it will happen in an environment of higher rates, tighter money and diminished credit.

    Just normal stuff of course. Nothing exceptional at all so we can already estimate what the outcomes will be like. In a worst case scenario of an overnight gold revaluation versus cash we can reflect back on what happened in the US in 1932 when the dollar was repriced versus gold and from this get an idea of what rising gold prices really mean at the street level.

    At that time, under FDR, gold was repriced from 20.67 to 35 dollars in a one day event which means gold rose 69% or put another way, that Americans instantly lost some 40% of their buying power. What happened next is the part that is interesting.

    From the low point of printing minus 8% to 10% inflation rates during 1933 to the years that followed saw the CPI running at an average closer to 4% growth annually. It was a dramatic 1200 point move that ended the deflation spiral although its always a good question to wonder if people feel better when they get less for their money.

    With prices rising again though the real debt burden was diminished and the country eventually got onto a growth cycle once more. Gold need not be devalued in a day by executive order for this effect to be realized though. A gradual process will likely have a similar impact and that’s probably what we will see instead in our coming future.

    Some notable analysts such as Armstrong now suggest that on the next gold cycle that prices could rise as high as 5000 US dollars. I have no idea if he will be correct but we should consider what that means to our future inflation and interest rates should numbers that high actually come about.

    Five thousand dollar gold would be a quadrupling from current prices and that’s great news for the bugs in the room but my concern is what that really tells us about how much buying power we will lose. In other words, how much of our discretionary income is going to be lost as dollars once again revalue themselves against “real money”.

    I think we should be very concerned though. Keep in mind the Treasury in the US “only” devalued dollars to gold by a third whereas what we could be looking at today is an almost epic loss in our standards of living if gold should actually quadruple in price over the coming commodity bull cycle.

    But what I am really getting around to saying here in a long winded way is that the real prospect of serious future commodity-based inflation catching up to Vancouver home prices mean they might never fall below a million dollars average in our lives. Ever.

    We all assume that the long run charts of house prices versus CPI will be corrected by homes falling to some terrible low but few of us ever consider that the chart might actually correct itself (partially) by inflation rising to bring the long run ratio back into effect.

    Just a thought for the day. And here’s a chart that’s somewhat related showing a head and shoulders top in Canadian housing as expressed by TSX Real Estate. Just note the green dotted line of real versus nominal prices. So there you go bears. You have nothing to worry about at all. Just take note that the time is almost ripe to rotate out of homes and back into resources once more.

    • Royce McCutcheon

      “Are the resident bears all in hiding now and just collectively holding their breathe hoping that the end has (finally) arrived for Vancouver’s unprecedented housing price bubble?”

      As someone who used to contribute here regularly and now only checks sporadically, I can report that I have neither hidden nor caved – and am I not holding my breath. 🙂

      It seems very few people can afford to rent at the high end and, as a consequence, renting detached homes in nice areas remains very good value as compared to buying. My family’s lifestyle continues to be subsidized by someone else counting on price appreciation (cue squawking) and my family’s net worth is growing on increased salaries and diversified investing. We’re still positioned to leave on short notice though – it wouldn’t be hard.

      My participation here waned because discussion on the topic has become pretty fruitless. I’m the first to admit that I underestimated just how thoroughly many were willing to cannibalize their young. I still learn things here and there by checking in and reading some of the articles people link. Still, signal-to-noise has declined in places like this (and esp. at VCI). Plus hyper-posting from a handful of disagreeable types that really need to figure out where they land on the Yale–Brown Obsessive Compulsive Scale just makes things sad.

      Anyhow, I remain interested in seeing what comes next. We may see a reality where an ill-conceived reliance on debt and foreign money unwinds and prices return to being governed by incomes and attainable rents. That scenario, of course, would be preceded by significant economic pain in this province. On the other hand, we may see more years like the crazy one we saw in 2016, with rapid gains that stretch affordability even further. In which case, why would I want to stay even if I did own? That leaves me in a pretty privileged position.

      Right now, what I’m particularly interested in is the odd market compression, where attached places are climbing, but detached places in (historically) desirable areas like the West side and West Van are falling. What to make of nice detached places in those tony neighborhoods selling for barely more than double, say, a new townhouse somewhere else in the Lower Mainland? That multiple seems really off.

      Anyhow, may we live in interesting times.

      Cheers.

  6. “23% in six month” and “a further drop of 700,000+ dollars over the next 18 months or so” ; so the crash has arrived. The question is, when do the bears buy? what is your strike price? are you bears lining up your finance in order and getting ready to buy? Bears can always start first by talking to mortgage brokers; they are nice people, they won’t bite you.
    Let see if the bear’s crystal ball is sound or cracked; the past 15 years told me it’s still cracked.
    Or, you can just keep posting the charts, do more TA…and keep waiting for the NDP to fix your problem!

    • Fred, a lot of the bears were bears by default.

      For one reason or another they just were not ready to buy when home prices were still normal and by the time their lives were organized they were too late having been priced out for a generation.

      If you were among the cohort born during the period of time when Vancouver home prices were still stable then congratulations to you. But don’t be too smug about it as a homeowner because that does not make you special or smart.

      What has happened in Vancouver is a price bubble of great exception formed and that could not have been predicted by anyone. It left half the population behind and where it stands now is you need to have a high income in the top percent to even save and qualify if its your first new home.

      We lost all the average middle class buyers along the way.

      • “smug” “smart” : not by a long short.
        I was not the one with charts and graphs and all the prediction, remember? When will the bears own their acts together and not finger-pointing to all the other factors for their misfortune.
        You are right, many bears are bear by default; so even if market crashed by 50%, they would want to wait for another 25%, but the market would have recovered upward.
        The problem with you bears is that you have called it a bubble. Isn’t this not smug! Many bears have been complaining years in years out and done nothing. Meanwhile, many youngsters have gotten into the market by their own disciplines. It’s possible!

      • Fred, the bears (as you term them) don’t need an excuse because they are factually victims of an economic circumstance without precedent in Canada and much of the world for that matter. So yes you are smug and showing ignorance of the facts.

        Would you also call European refugees during the Second World War, real estate bears because they were forced out of their homes and their neighborhoods?

        Were the Germans who survived Dresden real estate bears?

        When the West Coast natives who contracted small pox and fled their villages en masse real estate bears? How about the impoverished Irish during the potato famine who left the Isles and went to New York?

        Were those bears too?

        Maybe my examples are a little extreme but I don’t see how an epic historical inflation in home prices is any different when the outcome is the same resulting in an exodus of people unable to live where they were born.

        The Vancouver story is a calamity.

        It has resulted in an exceptional transfer of wealth into the hands of the very few at the expense of the majority and it has disenfranchised millions of urban Canadians or pressed others into taking on unbearable debt they would never ordinarily consider had the bubble never come along.

        The price being paid is a fragmentation of Canadian society into camps of haves and have not’s that is becoming extreme while the old idea of a common middle class and some semblance of social equality are just tattered ideas from a different generation.

        So yeah, you are smug. And arrogant too. Thankfully history has shown that such excesses are eventually contained and corrected. There will be a reckoning even if its going to take much longer than most people believed possible.

      • a history lesson, really? . Thanks but no thanks. Let enjoy the now, instead of the past and the future. I am sure there was not iPhone and Android then. There was noone killing anyone here so yes, your examples are just a way off. The problem with you bears, you think the current home owners have it easy without having sacrifice? Latte every day, expensive vacation every year? Bears just need to learn things need to earn, not by the sense of entitlement.
        So, smug or whatever, I earn what I have, be it a comfortable trailer at trout lake. Good luck with your cracked crystal ball, and the arrival of your reckoning even. I just thought that the reckoning for bears have been here a while.

      • a history lesson, really? Factually victims, really? Let enjoy the now, instead of the past and the future. I am sure there was not iPhone and Android then. There was noone killing anyone here so yes, your examples are just a way off. The problem with you bears, you think the current home owners have it easy without having sacrifice? Latte every day, expensive vacation every year? Bears just need to learn things need to earn, not by the sense of entitlement.
        So, smug or whatever, I earn what I have, be it a comfortable trailer at trout lake. Good luck with your cracked crystal ball, and the arrival of your reckoning even. I just thought that the reckoning for bears have been here a while.

  7. Steve “Chipmunk-face” and Stephen “PunWazoo”: two self-promoting pills-in-a-pod, Don’t bother looking for books with their “insights”.
    OTH: Ozzie Jurock is worth listening to, and reading his books. If not for a comment by Ozzie about 15 years ago, we would be desperate renters.
    Tsur Somerville is also worthwhile and has academic credibility – a somebody.
    And dulcet-toned Gollum-headed baritone Tom Davidoff – I could listen to that guy all day – just don’t want to look at him. ‘Fly me to the moon …’

  8. white_angelos_detached_defagitability

    holy crap farmer, concision much? … look here http://tinyurl.com/zkat2z6 … they claim they’re going to shrink it (credibility) … if all this ‘growth’ has been based on that – which obviously it has – everything will start to roll over and we’ll have some sort of financial accident … no one can pinpoint the timing … after that, they’ll mostly likely cave and have to reverse the shrinkage … but credibility will have been shredded and not be business as before … commodities have been multi-yr bear and bottoming/ed – not much slack there … probably to be firmest during an accident and also likely where most post-accident qe will go 1st … good asymmetry risk/reward here … pm’s hmmm … tamper-resistant ppties as a currency are why tptb dislike it and try to discourage … otoh, as approved alternates are abused (and they will be or we get cascade defaults from the hyper leverage), becomes more attractive … you try to read the crowd on this – most emotional market … but it’s holding up despite much negativity – likely to be pretty firm like other commodities … and could go well on a panic

    • Concision? Pretty funny but I had to look that word up since its usage is a little archaic. Thanks for the tip but sorry, its not possible to tweet out the idea I wrote today even if you would prefer that.

      Actually, that’s not quite true.

      I could have written “buy gold cuz its gooder” and fit in fine with the Neanderthals that spout such propaganda every day. But I would not have been able to convey that we now face a genuine inflation threat as the bear cycle in commodities finally grinds to a end.

      The thing is, gold WILL go back up and as it does we can easily predict that both Canadian and US dollars will weaken versus metals and most other commodities including oil. It means that stagflation in particular is going to be a threat in Canada as the economy sputters along with sub par growth yet the CPI begins to ramp up year after year.

      So it tells us we will be poorer and debt servicing is going to be increasingly difficult. It also warns that interest rates will be on the rise and perhaps the trajectory will be steeper than most expect.

      Forget the Federal Reserve for a moment. They don’t control the entire rate spectrum in any case but rather only the Federal Funds Rate. What you need to look at instead is any long term chart of inflation versus interest rates in order to appreciate that the two go hand in glove.

      In other words, a rising commodity cycle that drives inflation is quite out of the hands of policy makers. And my point was that we need to consider if gold merely doubles (never mind quadrupling) in value what that should be telling us about both inflation and interest rates in the future.

      So like I said, this is the top of the housing market if its also the bottom of the commodity cycle. Nice how they are lining up. And the obvious answer is to get the hell out of overpriced homes and be prepared to invest in resources again.

      See, I can’t tweet that.

      • white_angelos_detached_defagitability

        yes, see the same asymmetric setup … everyone believing cb’s can and will back them up – zero fear … tbd … if said confidence were to crack, huge huge crowd dynamic … generational

    • [NewStatesman] – How the world’s greatest financial experiment enriched the rich

      …”Once caricatured as little more than glorified bean counters, monetary authorities in the West have turned on its head the adage by Mervyn King, the governor of the Bank of England from 2003 to 2013, that good central banks should aspire to be “boring”.

      The fortified entrance of the ECB in Frankfurt, Germany’s otherwise drab financial capital, bears testament to this role shift. Screened off the main road by concrete blast barriers similar to those used to protect foreign embassies in the Middle East, it is guarded by a phalanx of dark-suited security men wearing secret-service-style earpieces, who chaperone visitors along a row of X-ray machines. In the front courtyard is a metal sculpture in the shape of a shrub with golden leaves. Critics have labelled it the “money tree”, the implication being that central bankers think they can fix the global economy by conjuring cash from thin air, in quantities that would make Croesus blush. That is exactly what they do.

      In a little under a decade, central bank “kitchens” in the US, Europe, the UK and Japan have inundated financial markets with more than $8trn using a system dubbed “quantitative easing” (QE). This equates to around $10,000 per man, woman and child in the countries whose currencies they guard.”…

      https://www.newstatesman.com/politics/economy/2017/10/how-world-s-greatest-financial-experiment-enriched-rich

      • white_angelos_detached_defagitability

        “expt” most highly euphemistic … everyone getting $10k would have been properly expt-al … wonder why fed doesn’t want an audit of its $3T balance sheet? … stuff they bot, from friends, not remotely worth $3T

    • [Atlantic] – Richard Thaler Wins the Nobel in Economics For Killing Homo Economicus: Thaler’s work shows that assuming human beings are predictably irrational is the most rational approach to studying their behavior.

      …”Richard Thaler, one of the fathers of behavioral economics and a professor at the Booth School of Business at the University of Chicago, has won the 2017 Nobel Memorial Prize in Economic Science.

      Renowned for his use of data to observe and predict how people behave in the real world, Thaler’s career has been a lifelong war on Homo economicus, that mythical species of purely rational hominids who dwell exclusively in the models of classical economic theory. In studies that borrowed from psychology, sociology, and plain-old curiosity, Thaler demonstrated that mankind was afflicted by emotion and irrationality, which influences their decision making on everything from retirement savings, to health-care policy, to professional sports.

      But Thaler didn’t contend that humans were randomly irrational. More importantly, he observed that people are predictably irrational (to borrow a term from the economist Dan Ariely). Some of Thaler’s most interesting work studied the predictably irrational effects of ownership, confidence, and a sense of fairness.”…

      https://www.theatlantic.com/business/archive/2017/10/richard-thaler-nobel-economics/542400/

  9. Disgruntled Condo Owner

    “in this regard we’d say this: No government can legislate or plan BC out of a gigantic speculative bubble in housing prices. There is no way to do that. Prices have become way too far removed from those determined by simple utility. The only way out is by a price crash (with no bailouts or any other silliness).”

    Vreaa, I disagree with this. The whole point of the article is that when China tightened Capital outflows real estate here went down. If our government had any balls at all NDP could have put a much more serious block on foreign money including Chinese money funneled to permanent resident families here in Vancouver. It took China to do what the Liberals and the NDP had absolutely no fortitude to do despite the NDP even promising this as an election platform. At least Christy Clark wore her corruption and greed openly. I will never vote NDP. If there were any chance of a Green government I would vote them in a heartbeat.

    • OK, fair point.
      What I meant was “no government will legislate or plan ..(etc)”..
      An incumbent government can’t afford to crash a bubble like this one, cos they are too dependent on it in far too many ways (and besides…re-election..).

  10. The “Bear” brush is used by the Bulls hear to tar a lot of people who may or may not be approaching the topic from the same place. Be careful with that because you diminish your own credibility.

    Personally, I am the type of Bear who wants his lifetime housing expenses to be reasonable and thinks that there are others who do also.

    I do not wish (and do not really have the option) to spend half of my elderly parents’ RSPs plus 3/4 of my and my wife’s take-home (which happens to be a round-number multiple of the median) plus all my liquid savings to put an altogether modest and forgettable roof over my family’s heads between now and when I become worm food.

    I realize that the current *fashion* is to pretend that such an expenditure should not actually be thought of as a cost, but as a method of ensuring one’s family’s future financial security. (An investment or a speculation, depending on the mental gymnastics that the buyer has used to arrive at his particular prognostication.)

    Having been utterly *unfashionable* for as long as I can remember, however, I defiantly declare that know a cost when I see one! 10 g’s a month on the mortgage for a bungalow in a boring middle-class neighborhood that’s not close to anything and not expected to be anything but the suburbia of minor city with a minor economy with bad traffic and bad weather and a bad regulatory environment for the next 50 years? That is a cost in my books.

    For the record, I am the type of Bear who believes the following:

    1) Housing is a cost and in Vancouver that cost is currently unreasonably high.

    2) *Unreasonably* expensive housing is also *unsustainable* expensive because the two are the same thing!

    3) Those who do choose to take on housing costs this high will do so either in anticipation of realizing a strong positive return somehow, or because they are so heinously wealthy that they are able to shrug off a multi-million dollar expense as one forgets a restaurant tab and focuses only on the warm feeling created by the meal.

    4) Unprecedented macroeconomic factors were required for this situation to be able to form

    5) All macroeconomic factors are temporary.

    As Farmer explains, I am in this position due purely to circumstance. I did not set out to live this way.

    I do not want to be a bear.

    I do not feel good about any of this.

    I do not hate Bulls and I do understand where they are coming from.

    I do want to own a house.

    I do understand what confirmation bias is

    I do not think that most Bulls could explain what survivorship bias is.

    So anyway, here I am — trying to explain this circumstance to myself as much as to anyone else.

    If I could convince myself that there was the slimmest chance of it not ending in a train wreck, I would get in my car and drive to open houses right now with the full intention of pumping obscene amounts of my own and borrowed capital into the Vancouver housing market.

    Unfortunately, even after 10 years of study and 10 years of waiting, I can’t do that.

    So here I am.

  11. A lot of the argument about gold / financial assets and how it should be valued so much higher isn’t that much different in the end from the argument for higher housing prices. Interesting that bears espouse arguments for one type – gold & financial assets, but denigrate the housing bulls for similar arguments for higher housing prices.

    As for the “crash”, wake me up when you can actually get a decent 2000 sq ft west side SFH that’s actually relatively up to date and in good condition for $1.5M or under. Until then, whether that Dunbar 3000 sq ft new build is selling for $6M or $5M really makes no difference to me, even though it might drag the mean / median selling up up/down by $300K to $500K.

    btw, there are a lot of families in this town earning $200K+/yr, often with very low interest rate (incorporation) that can afford the $3M+ house. Sure, they might only be 5% of the working population, but then west side houses probably constitutes 5% or less of the total housing stocks too. Cut off the Chinese money might make that Dunbar house from $6M to $4M. Still isn’t going to let your average bear buy that SFH their parents got for $100K on dual blue collar income like 40 years ago.

    • Note that you just multiplied made-up numbers by made-up numbers.

      Not even 10% of British Columbians earn six figures. BC is a poor province with a poor economy paying poor salaries in a weak currency.

      You have implied that 5% of Vancouver families all make 200k and are all shopping for a $4MM house in the west side simultaneously. That is a pretty complicated fantasy.

      You also just suggested that housing prices dropping to “only” 20 years’ income could be thought of as a return to fundamentals.

      That would be more than twice as expensive as Manhattan.

      So even your made-up numbers are predicting a completely unsustainable situation.

    • white_angelos_detached_defagitability

      arguments are different .. on fundamentals, which asset prices are driven by extreme leverage vs not … what happens as we delever … and this process is clearly under way … which assets have been beaten down, had malinvestments purged by a multi-yr bear cycle vs not … on crowd behavior, only certain is there will be excess in both directions … on vcr, possibly much of what made it attractive to foreign flows 20 yrs ago has been hollowed out by the net effects of those same flows

  12. The real question in my mind is why there are so many purported bulls posting here and on VCI.

    These blogs are a contrarian’s hideaway where those of us who do not share the fashionable and popular sentiment can come to commiserate, compare notes, and watch for signs of the coming carnage.

    Any bull who is confident in his opinion has no need to come here and troll.

    He knows where it’s going and can have his viewpoint reinforced at any Starbucks on any street corner.

    He can pick up any newspaper or ask any member of polite society and he will hear the accepted wisdom about all housing always appreciating in value forever.

    So I ask you, bulls: What are you doing here?

    • #SelfDoubt

    • white_angelos_detached_defagitability

      diversity of o? … besides they’re likeable nice and friendly … vs get on twitter to see whole world behave as a high school

    • Keep the bears in check. Imagine there is a prospective buyer reading 🐻 prediction from a cracked crystal ball? This kind of misinformation could destroy an opportunity. This is the internet world; why are you so concerned about who posts what! Why 🐻 take their image so seriously!

      • The bears who ask why bulls post here really are just deeply afraid in their little heart that they might actually be wrong, very wrong, so wrong that even if they are right, they still end up on the losing side. Someone who’s confident in their views wouldn’t care about people with opposing views. Heck, there are some people who will even enjoying picking the opposing side’s argument apart piece by piece just to prove how moronic those opponents are. Just look at all the work the pro-gun rights people are doing on various comments sections & boards to the gun control morons in US after every big profile mass shooting.

  13. I follow this blog, along with Garth Turner’s blog on finance and real estate, Gordon Price’s and Frances Bula’s blogs on civic affairs, and Jak King’s blog on civic matters and Commercial Drive. I also check in daily with BNN.ca, CBC.ca, The Tyee as well as several newspapers around the world that I follow on Facebook.

    I do so because as a citizen, a worker, a homeowner and an investor it is important to seek out not just information from various sources, but also fact based points of view that differ, often substantially from my socialist one. I benefit greatly from reading comments on issues from people who are on the right wing, as I learn about the facts they cherry pick to support their arguments, as I do in my turn. I put my commentary out there in cyber world, to see what the response is. Amongst the trolling and various other forms of attack, and one sentence dismissals, I read points of view that offer up thoughtful opposition to my own take on the world.

    Much of the discourse on the internet shows the ugly side of human nature, it tells us more about the people making the comments than anything else. I am here to learn, and I am willing to wade through the comments in order to be better informed and to have my assumptions challenged.

  14. @Burnabonian – Someone making $120K/yr with someone making $90k/yr means as a family they are making $210K/yr. A LOT of IT people in Vancouver are easily making 6 figure+ salary. Let’s not forget that many self-employed incorporates and hide much income inside corporations – hence the big uproar about T2’s changes to small biz tax loopholes. Look at how loud Garth is complaining about that. Let’s not even start with all the cash underground economy – trades, home improvements, private tutors, services, sex trade, etc. On paper BC looks to be a piss poor province, but in reality there are a lot of high income rich people walking around, they just aren’t reporting it on a T4.

    Even around my personal circle, and yes, not scientific, I’m the lowest income family by a big margin, and only 1 is working as a traditional high income job – dentist.

    As for methodology, I admit it’s not academic paper rigorous, but it’s probably still better than that 1/3 of all home buyers in Vancouver are from China crap that was being spilled by the news awhile back and whipping all those bears on VCI into a feeding frenzy.

    • Most of my circle probably have family grosses of 150-250k. Some are below that and some a multiple of it.

      The difference between your assessment and mine is that I know what recency bias is.

      FYI going by the group of 10 couples you are closest with is worse than meaningless: It skews your understanding of the problem.

      The only way to understand it is to start with data, not personal anecdote.

      Data tells us that there are fewer than 500k individuals in all of BC reporting six figure incomes. Not to Revenue but to census takers.

      This Data reminds us that BC is a poor province with a poor economy paying poor wages.

      Then we remember that only a certain percentage of those people live in the lower mainland.

      Then we remember that only a certain percentage of THOSE people are trying to buy housing at any given time.

      Then we remember that only a certain percentage of THOSE people are willing to buy into a market at current levels (since six-figure earners tend to be educated and analytical aka they are more likely to know better.)

      At this point, our number is so small that it can comfortably be rounded to zero.

      Regardless of how much money you and your dentist friend make.

      Regardless of how many tutors, hookers, and home improvement professionals you think lied to their census taker.

      Then we remember that 200k was an arbitrary number anyway: 200k in income now only gets you a 750k mortgage — aka a hot cup of jack squat in Vancouver terms.

      You know and I know that if you want to try come to the table in Vancouver you need to bring 400 or 500k+ in income, a long and perfect credit history, and another 400 or 500 or 600k CASH MONEY.

      Try to buy with anything less and you will get laughed out of New Coast Realty for wasting their time.

      Anyone with those credentials who happens to also be looking to buy real estate at $2000/square foot aka $10,000/month (120k/year after tax) in carrying costs is a fictional character riding on the back of a fictional character from a different cinematic universe. They are 1% of 1% of 1% of 1%.

      And yet to be a bull you have to believe that they are lined up around the block for every neighbourhood to continuously support prices between now and when you retire.

    • Let’s not even start with all the cash underground economy – trades, home improvements, private tutors, services, sex trade, etc. On paper BC looks to be a piss poor province, but in reality there are a lot of high income rich people walking around, they just aren’t reporting it on a T4.

      So you’re admitting that the bull market on the Lower Mainland is being sustained – at least in part – by tax evaders, drug dealers, sex trade workers, and money launderers. You also interpret the participation of these societal luminaries as unambiguously bullish for Lower Mainland real estate. While I agree readily with the former, I remain unconvinced of the latter.

  15. white_angelos_detached_defagitability

    hookers hot cup of jack squat! …hey, stanley kubrick’s last story seems a lot less kooky to lots of ppl lately

  16. white_angelos_detached_defagitability

    pffft! … http://tinyurl.com/y9pbpusf … then why m103 to discourage critics of sharia law?

  17. The bears who ask why bulls post here really are just deeply afraid in their little heart that they might actually be wrong, very wrong, so wrong that even if they are right, they still end up on the losing side. Someone who’s confident in their views wouldn’t care about people with opposing views. Heck, there are some people who will even enjoying picking the opposing side’s argument apart piece by piece just to prove how moronic those opponents are. Just look at all the work the pro-gun rights people are doing on various comments sections & boards to the gun control morons in US after every big profile mass shooting.

  18. @Burnabonian – Relying on Census data for your salary info is like trusting survey data on how good driver people think they are, or how good of a sex partner, or how many people they had sex with. Very unreliable. Frankly, I fail to see why people who lied to CRA would be truthful with Census on salary info. If anything, they would probably make sure whatever they report to Census matches up with CRA.

    Even if we take your number of 500K reporting $100K+/yr, that’s easily 300K+ duo-income families making over $200K/yr. As for borrowing capacity, in the last 10 years, a $250K/yr combined income can easily get you anywhere from $1M+ still to close to $2M in mortgage during the crazy years. Add in existing equity, appreciation, and such, $3M to $4M house is not out of reach for a mid-30s to under 45 couple family making $200K/yr. There are only about 2M to 3M people in GVRD by the way. So even 200K families making over $200K/yr is a lot of buying power.

    • You are using imaginary numbers again to make your imaginary point.

      The 200k family income bracket is skewed towards people at the ends of their careers — people who tend to be downsizing not upsizing.

      Years ago those people could get a >$1MM mortgage but now they can neither get one nor *renew* one. The $200,000 income bracket is priced out of SFH — even of SFH’s they may currently hold mortgages on.

      You estimate 200,000 families with $200,000 incomes live here but there are only around ~480,000 *individuals* with those incomes in the entire province.

      We know that only some of those individuals have a spouse with a similar income. Let’s say 10%, since they tend to be boomers and they tend to be 65 or older.

      Only some of those live in the lower mainland. How about half.

      Only some of those are actively trying to buy more expensive real estate at any given time. I would guess that 1 family out of 100 trying to sell their house and move at any given time.

      Add that up and you are left with enough buyers to fill a few overpriced vegan restaurants on Main street.

      Meanwhile there are 10,000 sellers trying to unload properties at this very second and thousands of them are asking buyers to come up with millions of dollars of cash money each.

      Hence all those little red arrows: http://www.myrealtycheck.ca

      • “there are only around ~480,000 *individuals* with those incomes in the entire province.” — Meant to say ~480,000 *individuals* with six-figure incomes.

        Again: Poor province poor economy poor wages poor people. Borne out by statistics, borne out by anecdote. Want to see MONEY? Go one province east and look around.

        You are relying on an imaginary class of fantasy people who have high incomes and high net worth who walk among us undetected to make your economic argument.

        Which is the equivalent of saying “a wizard did it”.

  19. Btw, I’m not saying foreign money is not factor. In fact, I’m one of the first ones to say foreign money is a big factor in Vancouver on VCI and here at least 5 years ago. However, I think the effects is now starting to peter out, and even if there is still a lot of foreign money sloshing around, it is affecting the locals less because the luxury market are now basically trading between foreigners only. Locals are basically out of that market permanently.

    Also, it really depends on how you define foreigners or foreign money. A lot of immigrants from China can LEGALLY bring millions from China when they emigrate from China. That is allowed and exempted from the $50K/yr limit. People just don’t understand that and thinks even if someone leaves China and come to Canada, they can’t bring their assets over.

  20. @Burnabonian – Uhm…I don’t know who you hang out with but I don’t hang out with anyone over 55 or even 50. Most people I know who are making 6 figures are doing it since their 30s, some in hot IT / finance / medical / law sectors are doing it since their mid-20s. Seriously, any competent IT programmers / developers are now making 6 figures+. New grads from university are getting $70K/$80K offers.

    You don’t need two people making 6 figures to have a family income of $200K. You just need 1 person making $130K+ and another making $70K+ to get to $200K. I know lots of families where at least 1 person is pulling $150K+ easily, and as I said only 1 is in a traditional high income job – dentist.

    That’s just for the private sector salary jobs, never mind all the small business that JT is targeting, and the gray or underground economy.

    Seriously, this city is flushing in money in a LOT of jobs, whether that income is reported as salary on T4, or taken out as dividends from small corps, or simply undeclared.

    This isn’t to say we don’t have lots of foreign money coming in. I believe in the effect of foreign money, though I think it’s waning fast and having much less impact now. But there are a LOT of high income individuals and families in GVRD.

    • Statements like, “there are a LOT of high income individuals” do not constitute evidence. And as Hitchens said, “that which is asserted without evidence, may be dismissed without evidence”.

      And how do you reconcile your claims with current record-breaking household debt levels?

      • He does not even attempt to reconcile his claims with any available data.

        Once again, “a wizard did it”.

      • Geez..people with high income can borrow a LOT of debt! It’s that simple. Poor people making $40K/yr isn’t going to be running up hundreds of thousands of dollars in debt.

      • Because I have resource of Stats Canada & CRA combined? Geez…

        btw, you already proven my point for me. You stated there are 480,000 individuals in this province making $100K+/yr in T4 salary income alone! Need I remind you that most professionals like doctors, lawyers, RMT, dentists, IT contractors, etc are all incorporated and hence don’t report high T4 salary but rather getting most of their income from dividends with liberal use of income sprinkling. Why else do you think there is such an uproar over T2’s closing the tax loophole?

        Simple math dictates that someone making $150K/yr only needs to marry someone else making $60K/yr to have household income over $200K/yr. It’s really that simple.

        Maybe you need to get out more and actually talk to people more. You would be surprised how much people in various lowly, menial, dead end jobs actually make.

      • Nope, that is census data not T4.

        I know lots of families who make 150-250 and none of them can afford houses.

        250k means priced out.

      • @space.

        Unless you can show that incomes have risen in lockstep with the dramatic rise in household debt, you haven’t reconciled the two.

        In an earlier post you state: “So even 200K families making over $200K/yr is a lot of buying power.”

        There are only 348K dual-earner families in all of Vancouver. Their median employment income is $91K. Do you seriously think that over half of them are pulling in over $200K a year?

      • “There are only 348K dual-earner families in all of Vancouver. Their median employment income is $91K. Do you seriously think that over half of them are pulling in over $200K a year?”

        He already TOLD you. A WIZARD did it.

      • “I know lots of families who make 150-250 and none of them can afford houses.”

        Obviously these guys have budgeting issues or there are just too many check boxes on their list. If they think they deserve brand name clothings, shoes, fancy iphones, expensive vacations, dine-out, latte, then, of course, none of them can afford houses. Something has got to give! They cannot have it all! Simple!

      • No, if you make 250 grand you cannot afford a house.

        If 45% of your take home goes to housing costs, you need to gross a large fraction of a million to afford a house.

        Those who gross a small fraction of a million need not apply.

        Unless…let me guess…a wizard did it?

      • “No, if you make 250 grand you cannot afford a house.”

        it depends on your definition of “a house”. Is it entitled to a sfd in point grey with granite counter top and fully stocked wine cooler?
        People buy every single day. How do they do it? Everything seems impossible to the naysayers anyway.

      • “People buy every single day. How do they do it?”

        With lots and lots of support from others (family; bankers) who buy into the same story that they do.

    • Again, it does not matter who you or I hang out with.

      Because any one “friend group” cannot possibly be a representative sample of the buying population. Unless you think that Ross, Joey, Monica, and Chandler (or maybe Jerry, Kramer, Elaine and George?) were representative of the typical New Yorker?

      What you have described is a self-selecting group of (by definition) the so-called 1%.

      Your anecdote can easily be countered by the equally frequent anecdotes of hiring managers who post a $12/hour reception job and get 200 resumes…including people with Masters’ degrees in STEM fields. Or of taxi drivers and skytrain mechanics who are Ph. D’s and Cardiologists where they come from.

      The point being that anecdote is meaningless.

      Even if you assume that for every 10 people reporting their income bracket correctly (to say within $100,000/year) to statistics canada there is one who has found a way to be a tax criminal sustainably, you still barely change the numbers.

      The fact is that the only way to believe that there is a statistically significant number of above-$200k-salary-families in Vancouver is to a) assume that statscan has been publishing broad falsehoods for as long as they have existed, and b) assume that there are *hundreds of thousands* of tax criminals walking amongst us undetected. It’s an absurd proposition.

      There are certainly hundreds and probably thousands of tax criminals but certainly not hundreds of thousands.

      PS also don’t forget that 200k salary families are priced out anyway. It’s about 400k or 500k salary families and nobody has ever argued that there are a lot of those in this city.

  21. To those of you who appreciated the purchase and renovate thriller: Froogle Scott Chronicles, there’s another, with much merit, at eleventhapostle.wordpress.com – 2066 Brunswick Street, Halifax – former British army officers housing. Regrettably, she doesn’t give any prices but, clearly, spent a pile.

  22. Vancouver Housing Characteristics 2016
    http://vancouver.ca/files/cov/housing-characteristics-fact-sheet.pdf

    Only 41,330 SFH available in Vancouver in 2016 and that number will only drop! Remove all the ones that have been bought by mainland Chinese that will now be trading in China than Vancouver, there is even less left for the locals.

    • “Vancouver” is an arbitrary boundary. It is a taxation district, a policing district, and a policy district, but not a city in the geographical sense.

      If you are deliberately obfuscating Vancouver Proper in conversations about The Lower Mainland, I can see why.

      Because The Lower Mainland has lots of land and lots of supply and they are building lots of SFH in it.

      All of your arguments collapse when you discuss this place as the real estate market that it is: 2.3 million people, sprawling, with lots of room to grow.

  23. 28 60th Ave E: post war tract house on a tiny 3,000 sq/ft lot. Bought last year for $1.328M. Scraped and Van Specked. Yours for $2.768M – even if you had the money, why would you want this wart.

  24. white_angelos_detached_defagitability

    many consider 1917 as pivotal to rest of century … 2017? … http://tinyurl.com/y97rnz5m

  25. Greater Vancouver Region income and housing data:
    http://www.metrovancouver.org/services/regional-planning/PlanningPublications/MV_Housing_Data_Book.pdf

    Yes, Vancouver is arbitrary, but then again a lot of people given a choice would pick Vancouver over Burnaby / Surrey, and Vancouver is built out and losing SFH every year. Burnaby is fairly build out as well and there aren’t a lot of free land for SFH. Same for North Van, West Van, Coquitlam, etc.

  26. @El Ninja – As for income, the top 10% of income earners have seen their income rising quite a lot. Add in declining interest rate, it is easy to see how household debt can rise even without overall income rising much. RBC has put out a housing report about 2 years ago which shows that despite the massive rise in mortgage debt, the monthly payment amount actually hasn’t increased much in the last 20 or even 30 years.

    Maybe you should look up bond convexity and how amortizing payment works El Ninja.

    Most of the high income earners are in GVRD, and sure 91K is the median family income, but that’s all that is. it doesn’t tell you anything about the distribution of household income. There was survey done by a wealth planning firm + magazine about that about 10 years back. Vancouver has something like 20% of household surveyed that makes over $150K/yr. You can Google that survey easily.

    • Hahahahaha that datasheet is amazing.

      Vancouver is even poorer than I thought and poorer than hypothesized above.

      Do yourself a favour. Take a moment and read your own data.

    • @space.

      Spare me the sanctimony. And no one is impressed by pseudo-intellectual jargon like “convexity”.

      You say: “The top 10% of income earners have seen their income rising quite a lot”.

      Again, this is pulled out of thin air. Where is your data? “Quite a lot” doesn’t cut it.

      You also say: “(Median income) doesn’t tell you anything about the distribution of household income.”

      In the very document you referred us to, had you actually looked at it, you would have seen that the distribution clearly displayed. It shows that just 11% of Vancouver households (i.e. 30,000 of them) earn more than $150K a year. Almost half earn less than $50K.

      Vancouver’s median household income is $56K. Do you know what it is in Portland, Oregon? $80K (CAD). That’s 43% higher. I repeat: 43%.

      Burnabonian is right. Vancouver is not a wealthy city, and your own data shows it!

      Oh, but I forgot. Vancouver has massive secret unreported Chinese income that, if only it were accounted for, would make our RE look cheap!

      Buy now, everyone!!

    • …it doesn’t tell you anything about the distribution of household income.

      Yes it does. That’s why median is often a better measure of central tendency than mean. Mean is just an average, and can be skewed by extreme values in the tails. Median, on the other hand, is a measure of the precise middle (exactly half of the population fall on either side). Far from not telling us anything about distribution, median is a descriptor of distribution. It doesn’t tell us anything, but it tells us where the precise middle is.

      RBC has put out a housing report about 2 years ago which shows that despite the massive rise in mortgage debt, the monthly payment amount actually hasn’t increased much in the last 20 or even 30 years.

      Um… mortgages grow while payments stay the same for 3 decades is…. bullish????? I

      Bigger loans, same convenient monthly payment! That sounds like a used car dealership ad.

  27. [CBC] – Vancouver’s Santa Claus Parade faces cancellation due to lack of funds

    …”Jolly Old Saint Nick may have one less appearance on his itinerary this holiday season if the non-profit society that runs the annual Vancouver Santa Claus parade doesn’t find some cash soon.

    The annual event is short a sponsor after Rogers gave notice, more than a year ago, that it would no longer contribute the $150,000 for the spot of title sponsor…

    …The parade society has given itself two weeks to find a new sponsor or the parade will be cancelled.”…

    http://www.cbc.ca/news/canada/british-columbia/vancouver-s-santa-claus-parade-faces-cancellation-due-to-lack-of-funds-1.4351170

    • white_angelos_detached_defagitability
      • I say Mary Kissmyass. It is a loathsome capitalist gorgefest sandwiched between layers of a perverted cult. Leave Crapmass to the idiots who believe that garbage; make those church-owning assholes pay property taxes; and stop playing that grinding awful shitmass “music” when I’m shopping for groceries. I dread that assault on my ears every year. Last year, with my custom ear plugs and headphones over those, I caught less than a minute of it. Even that was too much; worse than a dentist’s drill. Hate, hate, hate that shit. If I could bring Jose Feliciano back from the dead and stick a recording of Felice Navidad along with a pile of Crapmass ornaments up his ass, I would.

      • white_angelos_detached_defagitability

        with you re:commercialism but it ain’t about that … “we’re stopping cold the attack on judeo-christian values” … a cultural war – why trump wades into it with nfl/hollywood/etc. … those values trace back to reformationist christians and jews are what make the west free vs others … eg. where abolitionism originated

      • Head not screwed on just right?

        http://web.mit.edu/tere/www/text/grinch.txt

  28. There’s a T-shirt that reads: Religion harms us all.
    Of all of these harmful con jobs, the cleverest of these mind control operations is Islam. Their five times a day prostrations, what is essentially known as the Child Pose in yoga, is fabulous for relaxing the spine and improving flexibility in the knees – ideal for keeping the humping musculature in shape.
    Religion is, 95% of the time, a bunch of guys ruling over a flock of fools. There’s usually weird headgear involved; food fetishes and phobias; control over fornication, and the lack thereof.
    You want war – power – look to religion.
    Which is why the vastly entertaining, massively insightful and articulate Putin has harnessed the propaganda of churches.

    • How do you explain warring behavior in chimps?

      Read up on your Jordan Peterson…

    • True: humans certainly don’t need religious belief to be aggressive, to make war…. but belief often creates an excellent rationale for those crimes.

      • Religion is simply one more avenue through which basic human instincts like tribalism manifest themselves. Eliminate religion, we’d find something else to fight about. Blaming religion for war misses the point. Much of early religious teaching – of whatever faith – was designed precisely as a civilizing influence – to try to temper and control our animal tendencies toward violence and tribalism. With decidedly mixed results.

    • white_angelos_detached_defagitability

      i don’t believe islam is all these backward things we see now, by design … sharia was a big improvement originally … but the problem for islam is this was 1300 yrs ago and other cultures have moved forward, a lot … why is western culture dominant? … why can so many different ppl come into it, integrate and contribute? … it’s the freedom, imo … and if that is true, where did those values come from? … mostly from reformation christians and jews … who were rebels … were persecuted on the continent and in the colonies … and when they booted george 3 and got to the top, stuck to principles, did not put themselves 1st above god … your concept of god may differ but you share the same values … far from perfect but this has been the best culture so far … if the values are lost, the west goes backwards and fades away … what did he say? “in america, we don’t worship government – we worship god?” … the opposite of fascism … meanwhile, what do the progressives and socialists say? … ps. beware of false conservatives … but from a true conservative, the worst you have to fear is that they just want to be left alone

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