Blog Post To Share

A lot of people compare our market to the States in an attempt to predict the future. It always seems to me as if they’re doing a comparison of convenience. I suspect the prediction was made before the comparison.

Still, I find interesting stuff in the States, too. Jeff Brown (BawldGuy Talking) has in interesting take on whether to buy now or later on Bloodhoud blog.

Jeff’s a San Diego boy, and I think his take,whether on the San Diego market, buying in general and use of agents, is interesting.

Advertisements

13 Comments

Filed under Other Blogs

13 responses to “Blog Post To Share

  1. whybuywhenucanrent

    Very interesting–RE prices are indeed somewhat predictable, cyclical. Difficult to predict when cycles will begin/end, though.

    See my predictions on the previous post.
    https://rireb.wordpress.com/2007/05/15/tuesdays-numbers-4/

  2. mike

    http://ideas.repec.org/p/bca/bocawp/07-2.html

    Oh, come on rob, you know better than to post this troll bait.

    Not only has the recent runup been anything but a local phenomenon, there is an obvious correlation (historically speaking) between what happens in the US and Canada.

    I’m not a bear, but I’d be crazy to ignore what happens in the US.

  3. jim

    Its always a good time to buy. Its better to over extend your self than be priced out forever.
    http://pricedoutforever.com/
    As long as the metrics make sense why would you care if your downpaymen(life savings) dissapears over a 3 year period?

  4. dignanmaplethorpe

    I have a tough time taking real estate advice from someone who lives in a bachelor pad. It’s also sounds by his account that he’ll have a tough time selling it for a decent price.

  5. Canadian David Lereah

    http://tinyurl.com/2bwthy

    Do not violate the sacrasanct commission!

  6. dignanmaplethorpe – Beside the fact your parameters for choosing a real estate advisor are analogous to my sister betting on sports games based upon the colors of team uniforms, my bachelor pad is only labeled as such because a bachelor has lived there for the last few years.

    It’ll sell for just under $600,000 – does that make me a better candidate for dispensing real estate advice? 🙂

    As far as actually selling it, this particular condo project sells by word of mouth in a week or two – though that is incredibly rare in San Diego these days.

  7. robchipman

    Thanks for the link, Mike. That’s a good source of information. More comments on that below.

    Jim: do we need yet another website that’s fighting the Man? Maybe someone, somewhere, is saying “Buy now or be priced out forever”, but if so I think his name is Bob Rennie, not Rob Chipman.

    CDL: Any idea why a state government would have anti-commission rebate laws? Try thinking that one through to determine if its consumer protection or Realtor protection. And, if the internet is so powerful and so full of promise, and if the market doesn’t need or want full service Realtors, why haven’t discount providers dominated their part of the economy? Can you really argue that Realtors, who as a group experience huge turnover and lower incomes than is generally recognized, can still pull off a continent wide conspiracy to control access to information? Microsoft is subject to US federal law, but not individual real estate boards?

    I don’t know about San Diego, but are you aware that here, in BC, E&O doesn’t cover a Realtor buying/selling his own property. Therefore, its worthwhile for a Realtor to buy/list with someone else, provided they want to pay a commission. Jeff is indicating that despite (or perhaps because of) his real estate knowledge, he’ll use another pro on his own business. I think that’s a good counter-point to those who think Realtors don’t add value.

    Digman:

    I’ve read a bit of what Jeff has to say. I’m not sure everything he says is applicable to Canada, and I’m not convinced we can chase growth by changing locales, as he recommends, but there’s no denying that he takes a serious approach to investing. A quick look at his blog subject matter indicates that (downplaying future SD income property appreciation, advance tax planning, planned approach to investing).

    If you assume he knows what he’s talking about in regard to RE, and if you know he’s from what many consider an exemplary US bubble market, his remarks are interesting.

    Mike:

    The comment isn’t meant to troll. I think you can agree that there are many bears who simply say “It happened somewhere in the States so it has to happen here”. The examples, applications and assumptions are so broad as to render the argument worthless, really, and I can’t be the first to conclude that they’re being presented by a pretty close minded bunch. (Yes, that right – some bears are close minded, non-analytical, ignorant people. Many other bears are quite different. The same goes for bulls. Caution, the coffee is hot).

    Your points and your link:

    Yes, the current local runup is not restricted to this locale. More money chasing the same amount of hard assets is a global phenomenon, I agree. A bad US economy (to which the housing problem presents a challenge) will have Canadian fallout. And yes, a 91 cent dollar will lead to higher exports, a stronger economy, more inflation and higher interest rates (no, wait, that last part may not actually make sense). In short, while I agree that we can’t ignore the US, I don’t buy that we’re in lockstep with it.

    First things first. The report you link to is excellent. Lots of good stuff. Thanks for it. I’m not attempting to disprove your position nor invalidate the report in what follows. I’m just highlighting out some interesting points.

    It says that US house price appreciation appears to be over, and Canada “may” soon follow. “May” does not equal “obvious correlation”.

    The report also recognizes that monetary policy may have significant impact on when housing exits a cycle (whether up or down). If we consider interest rates and money supply important parts of monetary policy I think we need to agree with the report on this point. However, future monetary policy, both in Canada and the States, is unknown to a large extent.

    It also says, as you indicate, that there seems to be a fairly high degree of correlation between the US and Canadian markets. I’d point out that the Canadian market varies considerably east to west, and Vancouver has often run counter to the national market.

    Its also interesting that the report indicates that contractions (from start to finish) are strongly linked to real interest rates and real incomes, while expansionary periods are not.

    The report also seems to indicate that the relation between fundamentals (such as incomes) and housing prices isn’t as strong as might be expected.

    The report also points out that booms differ (the ’80s boommay have been regional, while the current boom is national).

    Contractions (in general, not just in RE) are more duration dependent than expansions (the longer they go on the more likely they’ll change).

    The report also points out lots of differences between the US and Canadian markets. The US has had 2 RE contractions since 1975, compared with 4 in Canada since 1980. Our contractions are more volatile (shorter but greater price change) than in the US. Their expansions can last almost twice as long as ours, but usually our expansions last longer than theirs.

    That doesn’t prove the US doesn’t effect us, but it does show we don’t move in lockstep. The report also shows some similarities between the two markets.

    Maybe I’m reading it wrong, but Table 5a seems to indicate that Vancouver does tend to run counter to Toronto/Montreal and, by and large, the US.

    Excellent report, though, and thanks for the link.

  8. jim

    Rob:
    Fair comment. I will try to chill out a bit. I thought it was funny. Wrong blog for that.

  9. Canadian David Lereah

    Rob:
    Certain States have anti-commission rebate laws because the real estate lobby writes them via their enormously powerful lobbying efforts. The NAR has consistently put up roadblocks in response to any effort by discount online brokerages wishing to set up shop, or any other effort that threatens their $60billion a year commission based business; all of course under the guise of “consumer protection”. I would take a look at the mess around erealty.com and redfin.com to see how vehemently the industry will fight tooth & nail to prevent any attempt by businesses to cut into comissions on a large scale.

    With respect to US Federal Law, I will let the Department Of Justice speak for themselves:

    “The Department of Justice’s Antitrust Division today filed a lawsuit against the National Association of Realtors (NAR), challenging a policy that obstructs real estate brokers who use innovative Internet-based tools to offer better services and lower costs to consumers. The Department said that NAR’s policy prevents consumers from receiving the full benefits of competition and threatens to lock in outmoded business models and discourage discounting.

    The purchase of a home is one of the most significant financial decisions a family can make, and NAR’s policy stifles competition to advantage some of its members at the expense of home buyers and sellers across the country,” said J. Bruce McDonald, Deputy Assistant Attorney General in the Department’s Antitrust Division. “Consumers benefit when real estate brokers are free to compete vigorously by offering innovative services.”

    I’m sure things are completely different in canada though… 😐

  10. Johnnyrent

    Speaking of San Diego, if you really want to know what has been and is going on there, and other SW US markets, go here: http://bubbletracking.blogspot.com/

  11. robchipman

    The fact is that it is different here. Discount brokerages have access to MLS. It happens every day. You can’t deny that.

    It may be that in the States commissons (prices) can be fixed, but that is clearly against the law here.

    NAR is a funny beast, and arguably doesn’t respond well to new technology, but the fact is that many US Realtors don’t support some of their approaches. However, if their lobby is strong enough to control state legislatures, what do they have to fear from the DoJ? (In other words, commission rebate laws aren’t NAR inspired, and their lobby isn’t that powerful).

  12. mike

    Yeah, you bring up an interesting point that I should have seen on the first read through. A 0.09 correlation between Vancouver and the US market.

    Interesting that it’s highest correlation is with Chicago.

  13. robchipman

    CDL:
    For what its worth, here’s are a couple Redfin blog posts
    http://www.bloodhoundrealty.com/BloodhoundBlog/?p=1422

    http://360digest.com/2007/05/15/waiting-for-the-dust-to-settle/
    Mike:
    I don’t want to sound like I’m saying I told you so, but the 0.09 brought back echos of “We always run counter to TO. When they’re up, we’re down”. The funny thing is that right now we are running counter to TO, which correlates more to the States, yet we’ve been running more in tandem with the States the past few years (until their reversal). Go figure. And, yeah – why Chicago? Again, go figure. Still, great report.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s