Another interesting blog link

My recent post about the bubble bursting brought a link from Hypster about OC Flip Track- Orange County Housing Bubble Blog. There’s nothing like another bubble blog pointing out the insanity, right? However, a salesman can always find a positive in something, and in this case its another link to Jim Klinge’s Bubble Info Blog – A Guide to North SD County real estate . Jim has several interesting posts, but one worth looking at (especially if you anticipate buying or selling in a declining market) is this one on qualifying comps .

Jim’s blog has yet another interesting link to Rick Campbell’s Real Estate Report , which contains some interesting numbers that we can compare to this market.

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14 Comments

Filed under Daily Numbers, Other Blogs

14 responses to “Another interesting blog link

  1. Pondering

    Nice links Rob. It is interesting to see perspectives in markets in declining conditions. Both agents seemed professional and provided balanced opinions.

    It is funny to hear $399 per square foot described as representative of a “hot” market. They obviously don’t know about Vancouver where crack houses go for that much.

  2. M-

    Interesting, the last link for the Real Estate Report shows that they have a 95%+ sell/list ratio!

  3. robchipman

    M- I think you’re reading that wrong. If you’re looking at April sales I think its telling you that sale price is 95% (approx) of list price. I do the same by saying that sales are going for and average of 1.5% less than list price.

    Pondering:

    When I first went to California I thought RE was grossly undervalued. I think that’s a product of always seeing Caliornia on TV as a kid and assuming its the Promised Land and super cool and whatnot. Don’t get me wrong, there is some very pricey and very nice SoCal real estate, but what you find funny ($399 is their idea of hot?) isn’t so strange. I think land supply explains a lot.

    Much as I’ll be derided for saying Vancouver is the premier Canadian location much the way California is a goal location for the States. The big dif between here and California is that our land supply is restricted – we have a tiny corner of the Province. Not a lot of room for places like Pismo Beach. California, on the other hand, is pretty stretched out. There is a lot of supply (TJ to San Francisco) in California. This difference in land supply gives Vancouver a special competitive advantage in the Canadian market. (As the world globalizes and borders become less limiting this advantages decreases, obviously).

  4. Good links Rob, But wouldn’t it make more sense to compare California to BC rather than to Vancouver? And you know we’re not running out of land in BC quite yet right?

  5. Noname

    Rob said – “When I first went to California I thought RE was grossly undervalued. ”

    Is there any RE that you don’t find undervalued? Also, where do you derive this value from?

    Isn’t the value derived from its rental income potential which is indicitave of what people are truly willing to pay to live in a given place not counting speculative appreciation?

    Noname

  6. Mightymouse

    Paulb,

    I’m with ya… When is te sh!# gonna hi the fan. I find this amazing!

    Persnally, I predict our econimy will start to tank in late 2008, and 2010 will be a blood bath as olympic projects end and housing construction halts, (I’m assuming interest rates will rise and lending standards will tighten).

    I called this thing waaaayyyy too soon!

  7. Mightymouse

    Economy… Heh… Has anyone tried Maudite? Man, this is good beer!

  8. jim

    Rob said:”The big dif between here and California is that our land supply is restricted – we have a tiny corner of the Province.”
    Never heard that before. Oh wait:

    The Province
    October 5, 1980

    Even if the demand for houses falls in the outer suburbs, the market will probably never experience a downturn within the city proper. The real estate industry believes it is a captive market. There is virtually no building space left and if the desire to live closer to the city continues, values will keep soaring.”

  9. robchipman

    Jim:

    Keep the comparison in perspective. I never said land supply will keep local real estate prices rising forever, so just go buy something. I just said that the demand for West Coast property in Canada has a lot less supply to satisfy it than the demand for West Coast property in the States, and that this has been an ongoing theme that contributes to our prices. There is more real estate relative to demand in California than in Vancouver.

    And not to belabour the obvious, but if we look at the market since October, 1980, how wrong, exactly, was this Province article? Oh, I know, there was a reversal in ’81/82, but were they wrong about building space? Have we not accepted 500 sq. foot condos and basement suites as the norm? How long until we’re putting plumbing into garages and renting those? And we do that because there isn’t a land shortage? Who are you trying to kid?

    Pope:

    Can we compare the rest of BC to California in terms of land supply? A much higher percentage of California real estate is accessible and serviced, plus (and I’ll just throw this out for fun) you can get title to it. The Spanish stole it once, then the Mexicans inherited it, and then the Americans stole it from them. Along the way an awful lot of it got surveyed and had deeds granted. That isn’t quite what has happened here. (Again, I’m not arguing thta we’re running out, but we do have a fixed supply, and our supply is more restricted than some will admit).

    Noname:

    Is there any real estate that I think is over-priced? Obviously. Read the blog. Good metrics = buy. Bad metrics = overpriced. Pretty simple.

    Where do I derive my idea of value? Again, simple. I look at what I’d pay for something. That’s my idea of value. Yes, that’s a different definition than market value, but I arrive at market value a very different way. When I first saw California values I thought “Man, this stuff seems cheap. After all, the weather here is great, the beach is close, and the water is warm”. That was a personal opinion, and it was out of synch with market values. Its a good thing I wasn’t buying then.

    Real estate values are clearly derived from rents AND potential capital appreciation, and not by rents alone. The mix is determined by the location. That’s why you get better cap rates in Thompson Manitoba than you do here. Even Jim has stated that capital appreciation is one of his considerations when buying. I didn’t make the capital appreciation thing up. Its widely accepted.

    Another example: if potential rental income determines value, how do you explain the difference in price between Westside Vancouver and Maple Ridge? Its more than rent. Always has been.

  10. Noname

    Hey Rob!

    Thanks for your reply.

    I agree that appreciation is a big part of the value but that is typically already priced into the price.

    As you have mentioned, a place may have great value to an individual but that doesn’t mean that the property is undervalued.

    It may be undervalued to one, but it may be priced perfect for the majority. This is what I think Vancouver and many bubble cities are sufferring from.

    People are made beleive that Vancouver was/is undervalued becuase people living here are willing to pay X amount for an East Van special believing that the rest of the world also attaches the same value to Vancouver. Of course, this could be farther from the truth, just like Florida and Phoenix residents are finding out.

    Conclusively, though a property may be undervalued subjectively, it doesn’t mean that it’s undervalued in an absolute objective sense despite having a certain group (ie: Vancouverites) proclaim that it is.

    Once those immigrants, that all the condo holders are counting on, crunch the RE costs and employment income potential in Vancouver, they will quickly find out how overvalued all these places are especially when they don’t see the Sun for 6 months of the year…

    Noname

  11. hey, the water’s not that warm in CA. The surfers need wetsuits off Huntington Beach. But think big picture people. With an appropriate degree of global warming, land outside of the lower Fraser Valley will rapidly appreciate, as flood refugees swarm into the interior. Buy in Prince George, or stay home and learn to swim 😉

  12. robchipman

    Actually, ceejay, if we could just get Quebec to separate from Canada once and for all we’d up the amount of waterfront property as well 😉

  13. Anonymous

    “Have we not accepted 500 sq. foot condos and basement suites as the norm? How long until we’re putting plumbing into garages and renting those? And we do that because there isn’t a land shortage? Who are you trying to kid?”

    Yes, people like to live in small, cramped spaces given the choice. It has nothing to do with I earn XYZ flat salary and can only afford such and such mortgage or such and such rent and can only live here. Nah, nothing like that at all.

    A realtor blessed with extraordinary commissions, rental income and profits from flipping houses, can’t relate to people who live on flat salaries who have affordability issues.

  14. robchipman

    Anonymous:

    From what I hear its very easy to become a Realtor, and we apparently make tons of easy money, so come on down and join us. Affordability will never be an issue for you again.

    O.k., back to the real world. The claim is made that land here is not in short supply. My point is that making do with less of it (because it is in short supply and costs more) has become the accepted solution, and that solution is self-evident. Arguing that supply isn’t limited is somewhat akin to denying the obvious.

    If you want to own real estate and get rental income, contact me. I’ll put you on the plan. I don’t flip houses, and I don’t give advice on that, so you’re on your own there.

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