Friday Numbers

There were 253 new listings today and 253 sales, for a sell/list of 100%. Of the sales 48, or 18.97%, went over list. 18 of those were on the Westside. 16 were in East Van, 1 was in Port Coquitlam, 1 in Pitt Meadows, 8 in North Van, 3 in Maple Ridge and 1 in Coquitlam

Average list price of the sales was $548,613, while the average sales price was $543,551, a difference of $5,062, meaning the average sale went for 1.07% under list price. 24 properties went for list price. One property went for 12%($147,000) under list while the highest over list was 19% ($173,000) over . Average days on market to sale was 32.

There were 17 million dollar plus properties sold with two over $2 million.

There were 124 price changes, of which 20, or 16.13%, were increases. The average original list price of price changes was $661,574; the average new price was $646,357, a difference of $15,217, meaning the average price change was -1.56%. One property had its price reduced 12.5% ($500,000) while another had its price increased $55,000(22%).  Average days on market to price change was 48 days. 0.85% of all listings reduced their prices today.

Inventory in my target area continued dropping, reaching 12,265, while over 90s also dropped, reaching 2,132, or 17.38%. The 14 day rolling sell/list continued to climb, reaching 74.61%.

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123 Comments

Filed under Daily Numbers

123 responses to “Friday Numbers

  1. $fromA$ia

    Hmmm from about -4% to -2.5% prices and inventory dwindling a couple hundred.

    This change of fluctuation in the market is probably pannick purchasing with pre approved mortgages.

  2. $fromA$ia

    Since the rates are expected to keep rising.

  3. Strataman

    End of the month and end of the second quarter, it’s the next quarter that should point the trend. I’m betting inventory will climb to 4 months.

  4. Skeptic

    The increased inventory hasn’t hurt prices. The first week of July 2006, sell/list dropped to 60ish%, I’d expect we will start to see things slow down now for summer. No doubt the bears will point at that and tell us the sky is falling.

    Nearly 20% over list, that doesn’t happen without competition. Nearly 10% at asking price. 32 days on market, I think we’ll see continued price appreciation at least this year and next.

    Interest rates (BOC) aren’t going to go up too far, if we get more than 1%, I’d be surprised.

  5. Dave

    Looking pretty much like last year at this time, with the exception of higher inventory.

  6. Realist

    Every day brings us closer to another batch of “in construction” projects being ready for occupancy…

    Anybody noticed how empty and dark so many of the alleged “completed and occupied” look…

    Maybe there are many people who like to live without lights and furniture, or just maybe its “speculation”…

  7. fish

    To continue my thread with Rob from the last post.

    The prices in the building have actually been stagnant for the last six months. One or two sold for extravagant pp/foot around Jan and the sales prices since have been lower (accounting for view/size etc)

    The landlord has done very well. he bought two years ago and it is worth anout 20% more, so his return is not 2.7% but higher.

    Do I wish I had bought then? You bet. But at today’s prices, when I could rent it for 2.7%, it doesn’t make sense at all.

  8. fish

    Incidentally half my building is empty. The owners are off-shore and Albertans who have bought for a rainy day or investment, and clearly are not too bothered by having no income on their asset.

    About the general market. The numbers are not bearish yet. The only one that is vaguely bearish is the inventory number.

    Every other number Rob reports still suggests a fairly strong market.

    I fully expect this to change over the next six months.

    The winds are blowing against housing world-wide. In six months I expect:

    1) The US stock-market to have corrected
    2) Interest rates to be 1% higher here and long rates to be higher in the US. The thirty year just ended a long bull trend.
    3) Real estate in the US to have suffered significantly more losses.
    4) Real estate here to have started correcting, with some anxious investors trying to unload their cash-negative purchases.

    However for new entrants into this market the only fiscal argument I can see for buying now is if prices are likely to go up for ever. Otherwise, buying at such an expensive time, when so much of your income has to go to servicing the debt is probably not such a wise move. Make sure job loss/change or a slight drop in value doesn’t put you in a tough position.

    Rob will always have a market to sell to whether it is bearish or bullish.

  9. 15 Minutes

    I’m betting that the high sell/list we’ve been seeing recently is a temporary event as pre-approved buyers try to take advantage of the low rates they were guaranteed a few months back.

  10. Ed Bear

    I sense rumblings that bode ill for the future –

    http://tinyurl.com/2yyrsf

  11. zed

    Skeptic, are you suggesting BOC announcment July 10th could bring a 1% rate hike?? more like .25% if any

  12. Skeptic

    Zed, no, I agree with you. I’m thinking over the next 12-18 months, I can’t see more than 1% (max) in that timeframe.

    They won’t raise more than 0.25% at any one time.

  13. Concerto

    Ed Bear: That link seems to be saying that the Canadian lumbar industry need’s US housing starts to continue on at a record breaking level or they will lose money ? Me thinks the root cause of the Canadian lumber industry problems be elsewhere.

  14. nineofiveland

    I miss VHB .. but read this space regularly .. can’t wait until you folks drive the prices down so I can move to the left coast. Hurry!!

  15. Snick

    Ed Bear,

    An interesting AND timely article. I agree that it (the US “slump”) doesn’t bode well for OUR future. I think there are serious and systemic problems that will be revealed.

    OT…my niece bought a 14 year old, one -bedroom basement suited, 3 bathroom house in Chilliwack last week near the new “Garrison Crossing” area. Last April, the orig. price was for 422K. She and hubby bought it for 349K A REALLY nice place, too.

    So, don’t believe it when people say that the prices are “rising”. They aren’t.

  16. Snick

    …er, 3 bedrooms upstairs, in case it wasn’t clear.

  17. Skeptic

    Snick: “Last April, the orig. price was for 422K. She and hubby bought it for 349K A REALLY nice place, too.

    So, don’t believe it when people say that the prices are “rising”. They aren’t.”

    Chilliwack is West Calgary anyway. Good luck applying this technique to Van West or N Van.

  18. bubble gazer

    I’m surprised that the surge from pre-approved buyers has not been greater with recent rising rates.
    Could it be that the few remaining fools are coming to their senses?

  19. null

    Skeptic: “Chilliwack is West Calgary anyway. Good luck applying this technique to Van West or N Van.”

    Does WEST of Van West count? Or is ‘Vancouver’s different’ only good as far as the real estate beer goggle’s can see?

    (Quote from FVRP)
    “From Victoria:

    Many properties here in the million plus range are lowering their prices by $100,000 $200,000 and $300,000. One property ($3 million) just lowered it price $500,000.

    The Victoria RE agents are still spinning the tale that every wealthy person in the whole wide world wants to live here U.S., Europe and Canada (most notably Alberta).

    The high-end homes are just sitting. I have friends who have had their lovely home on the market for 80 days and only 2 people came to see it. Another person had an open house for their $1.5 million house and not one person turned up. Some homes have been sitting for almost 9 months.”

  20. vanreal

    Apparently what Switzerland is to money Vancouver is becoming to real estate: a safe refuge. That is why so many places are sold and sitting empty. This may only increase.

    nineofiveland, your comment signifies why the market is still very busy.

  21. Snick

    Skeptic,

    Obviously, the boom spread like a tsunami OUTWARD from Vancouver. (as in the past)

    Now it is in reverse. Simple.

  22. Skeptic

    Snick, when you use words like ‘obviously’ and ‘simple’, it sounds as if you know what you are talking about.

    Unfortunately the substance of your posts seems to prove the opposite.

  23. dyugle

    My friends just bought a place in South Granville. They looked at it last year and it was too expensive. This year it listed 50K less so they bought it. So waiting a year saved them some real money.

  24. The unthinkable"Renter"

    I smell pain brewing for those unsuspecting 2010 worshipers.

    I don’t hate 2010 but reality shows that the cost of living isn’t cheap, incomes don’t support living or even comfortable buying anymore.

  25. vanreal

    dyugle,

    That proves nothing except that last year the property was overpriced. It is only selling prices that count, not listing prices. I could list my place now for 1.5 million but it won’t sell.

  26. Snick

    Skeptic,

    You are TOO amusing for words.

  27. Domus

    “Snick, when you use words like ‘obviously’ and ’simple’, it sounds as if you know what you are talking about.
    Unfortunately the substance of your posts seems to prove the opposite.”

    Skeptic, in the exact science of RE, you are definitely a well-respected scholar instead……..

    Snick, keep up the good work mate!

  28. Domus

    “That proves nothing except that last year the property was overpriced. ”

    Vanreal, may I point out that we must have really greedy sellers….lately more than 90% of price changes are reductions in Rob’s areas……they must all be mispriced…..

  29. dyugle

    Vanreal.
    What would you or the other bulls have told my friends last year?

  30. The unthinkable"Renter"

    Vanreal would say that if you don’t buy, you aren’t going along with their common psyche and you must be a shlep.

    Agent’s, lawyers, notaries, insurance companies, CHMC etc etc. theres allot of people that are riding on this market. Granted agents can make money in down markets too….. but I am sure agents prefer a market like 2006!

    The groups listed above are doing their best to prop the market up. Look at all the gimmicks CHMC has introduced to make affordability easier. One introduction after another, well here we are with 5% down and the option of 40 year ammortization. When 5 year renewals come up, home owners have the option to take 40 year ammortations. BTW there won’t be a crash but any decline up to 15% in prices will feel like a crash.

    Was it not noted recently in the media that Vancouverites have to put 70% of their income towards housing?

  31. Domus

    Hi everyone,

    while Rob is at the Island enjoying the sun, I thought we might have a little refresher in basic algebra.

    I keep on seeing comments by bulls about having a safe buffer of appreciation that makes them immune to any decrease in prices. If that’s what you think, well, think again……
    Why? Because percentage appreciation on the way up can be undone by small percentage changes on the way down.

    Here is a simple example:

    Suppose house X was bought in June 2005 for $360k. Suppose that in June 2007 the same property is valued at a premium of 35%, that is, it changes hands for 486k. Nice appreciation, nothing to say about that. A jump of more than one third in just 2 years.

    Now, let’s say that an adjustment takes place. Let’s also say that in percentage terms the adjustment is “only” 15% over 18 months. That is, the price goes down to 413k by January 2009. That’s a big drop: why so large? Because 35% of 360k is not much larger than 15% of 486k!

    To make things even more interesting, think about this: under this scenario, nominal appreciation between June 2005 and January 2009 would be roughly 14.7% (360k to 413k). This would work out at roughly 4% a year, just barely above inflation!

    To be precise, let’s say that you had to also service a mortgage at 5%, pay realtor’s fees and taxes.
    All of a sudden you realize that a 15% drop in prices is a very big deals for many people who bought up to 2 years ago!

    One last thing: think about this. If you had waited you could have even snapped up a 3 beds rather than a miserly two beds…….

  32. vanreal

    dyugle, I would have told your friends to look at comparables in the area before buying. Sometimes agents are pressured by clients to list at stupidly high prices. Prices are still increasing so if that property dropped by 50,000 it was overpriced at that time and probably by more than 50,000. Your friends were smart to wait on that property but not necessarily smart to wait on the market.

  33. vanreal

    domus, I don’t get what you are trying to suggest. Any fifth grader knows what you have stated above and your point is what exactly?

  34. vanreal

    domus where are you getting your stats that over 90% of price changes are decreases Certainly not from this info posted here.

  35. Domus

    Friday, June 29th:
    “There were 124 price changes, of which 20, or 16.13%, were increases. ”

    Thursday, June 28th:
    “There were 165 price changes, of which 47, or 28.48%, were increases”

    Wednesday, June 27th:
    “There were 93 price changes, of which 7, or 7.53%, were increases. ”

    Monday, June 26th:
    “There were 109 price changes, of which 13, or 11.93%, were increases. ”

    So, if a price change is not an increase, then it is a…….?

  36. Domus

    “domus, I don’t get what you are trying to suggest. Any fifth grader knows what you have stated above and your point is what exactly?”

    Vanreal, this is easy algebra, I agree. It is just a simple example to show how important a “small” 15% drop in prices can be. The reason I posted this example is that I keep on reading comments saying: “We will go down only by 15% over many months, no big deal after previous appreciation”. The 5th grade algebra shows you that such reassurances are very misplaced.

  37. Domus

    In fact, it works even with a 10% drop in prices. The simple 5th grade algebra may be more powerful than you think. Small % depreciations can be big hits to the wallets of recent buyers…..

  38. The unthinkable"Renter"

    Domus, 15% is a big deal to me too. If I can save my upcomming motgage by $50k it would give me allot more breathing room long term.

    Vanreal, hasn’t Vancouvers prices been rather stagnant over 2007? Around -4% to Rob’s numbers and sellers expectations?

  39. The unthinkable"Renter"

    From the comments I’ve been reading here. It seems bulls are in denial somewhat.

    Lets not let get emotion get involved with comments here.

    Im sure if I bought at a premium I would be pushing the market as well as a bull.

    Unfortunatly it looks as if the Nasdaq(comparrison to Vancouver RE Market) has hit 5000 already.

    Nortel has hit $130 per share guys unless CHMC or the BOC comes up with another gimmick to help housing affordability. The market won’t push any higher.

    Sorry, parties over the sharp seven year, 250% peak now has to correct to tomorrows interest rates, economy, reality, immigration 1.5% etc. etc.

    Lets face it were over appreciated to 2020 numbers. I don’t expect a crash but 15% reduction over up to 5 years is realistic.

    Oh to reality 🙂

  40. tqn

    wow, those calculation are just so intelligent! keep beating those numbers to death. what comes next? another US links.

  41. Skeptic

    Domus, thanks for the algebra lesson. You are actually talking about mathematics, not algebra. For a definition of algebra, look here: http://math.about.com/cs/algebra/g/algebradef.htm

    You say: All of a sudden you realize that a 15% drop in prices is a very big deals for many people who bought up to 2 years ago!

    One last thing: think about this. If you had waited you could have even snapped up a 3 beds rather than a miserly two beds…….”

    Its only a big deal if there is a price decline and if the owner has to sell, both big ‘ifs’. Will you give a guarantee to anyone here that they will be able to purchase a 3br for 2br price at some point in the future ? I’d like to see that.

    The unthinkable renter – market is up close to 10% this year so far. Doesn’t seem like any bulls in denial to me, its a hot market, face it.

    Domus and Snick, I find it curious that you both respond to each others posts, its almost like its the same person with two different names…

  42. The unthinkable"Renter"

    Skeptic thanks for the reply but according to Rob’s numbers the market is not up 10%.

    Perhaps you might be talking about apartments and townhomes but detached homes seam to have hit a ceiling.

    Skeptic, you can’t trust the media. Strangly, I find Rob’s numbers trustworthy though.

    Like I mentioned above, if you are a RE owner of course you are going to cheer the market on.

  43. Snick

    Skeptic,

    Don’t worry about me. I am my own person and I reflect my own points of view.

    I have often wondered if the same is true for you.

  44. Domus

    “Its only a big deal if there is a price decline and if the owner has to sell, both big ‘ifs’. ”

    If you don’t sell, your gain is only theoretical. No point in talking about it.
    If you still have to buy, someone will sell it for you at a discount: you will save money. Which usually means you can afford more: ever bought a really great jacket or suit for a large discount during a sale???

    “Domus, thanks for the algebra lesson. You are actually talking about mathematics, not algebra.”

    Skeptic, you can call it whatever you want (even geography…), the result does not change: there is no buffer of appreciation that makes you safe if you bought in the past few years. Small percentage drops can hit buyers hard. Although I am not sorry about speculators losing their money, I am a bit concerned about ftb’s…….I hope the new comers realize the new rule: rent now, or be priced in forever!

    “Domus and Snick, I find it curious that you both respond to each others posts, its almost like its the same person with two different names…”

    This is funny: I thought Rob posted a while ago accusing bears of believing in conspiracy theories, back then I supported his point of view and said that the claim was ridiculous….look at you now, getting all emotional.

    ….check the IP addresses man……the fact that 2 different people disagree with you at the same time might simply mean that you are wrong….

  45. tqn

    “If you don’t sell, your gain is only theoretical. No point in talking about it.
    If you still have to buy, someone will sell it for you at a discount: you will save”

    If you are renting and saving money, keep doing it.
    If you are owning and enjoying your home, congratulation.
    If you are planning to buy in the future, keep planning. A tree cannot grow without a seed.
    If you are investing and ahead of the game, kudo to your smart investing.
    If you are happy where you are, priceless.
    If you just sit there and take no action hoping for a fairytail godmother, Dream On.

  46. Domus

    …….if you are thinking to get in the market now, think again.

  47. dyugle

    Vanreal
    They were shopping for a place for a whole year. They looked at dozens of places.

  48. WoodenHorse

    Replying to some comments in the Thursday thread here.

    Awum:
    Very good point regarding counting household formation and not straight pop growth.

    Rob Chipman:

    You’ve made a couple of good points here rob.

    Firstly, a quick and dirty on the table underlying the population chart from UBC indicates that the number of people coming in every year is about 16% higher in the last 3 years than it was in the 95-98 timeframe.

    However, this arguement of “don’t forget the demoninator” has been raised regarding housing prices. (i.e. 10% growth on a 100K house is much different than 10% growth on a 800K house, especially when incomes haven’t gone up by much).

  49. Realist

    Actually, “ARITHMETIC”…

    “Domus, thanks for the algebra lesson. You are actually talking about mathematics, not algebra.”

    http://simple.wikipedia.org/wiki/Arithmetic

  50. Skeptic

    tqn, you nailed it. One size doesn’t fit all.

  51. The unthinkable"Renter"

    Skeptic, do you think housing will only appreciate from now till 201o and beyond?

    If so maybe you can bring up some underlying fundamentals that I am not seeing.

    Don’t give me news media quotes, I want real down to earth reasons why 150% increase in cost of homes is justified.

    By the way comming up with a hot economy doesn’t work. Cab drivers are maybe making 4% more than they did in 2001.

    Oh ya, don’t give me this “BC the best place on earth” crap. LOOL You’ll get the same answer from Californians.

  52. zed

    I just spent the weekend visiting Edmonton. The recent runup in prices there has actually made Vancouver a more attractive place to live. Several friends of mine there are convinced the boom in Alberta is nearing the end, and are actively looking for homes in Van. Believe it or not people are moving here, and buying homes.

  53. The unthinkable"Renter"

    Edmontonians are tired of snow but the cost of living is better there than here.

  54. Son, what’d y’all lern in school t’day?
    Algebra, Paw.
    Son, what’s Algebra?
    Uh..pi r squared?
    Son, you didn’t learn nothin. Everyone know pie are round, cornbred are squared.

  55. Skeptic

    Unthinkable Renter, I don’t believe 2010 is that significant a date, sure there’s the Olympics. I don’t think the Olympics per se will make a huge impact. All the construction that is happening now will likely be contributing at the moment though.

    Markets do not follow fundamentals, take a look at the stock market and you will figure this out.

    I had a cab driver asking me advice on buying a place recently, his family is helping him with the deposit.

    The only way I see a huge correction is if there is a catestrophic event, like 9/11. We’re following a trend at the moment and if nothing changes, the trend will continue.

    Sure, inventory is increasing and eventually this should take some heat out of the market. Unfortunately for the bears, we’re probably looking for inventory of 20,000 before you start to see prices falling.

    Interest rates may tick up a little and this may put pressure on those who are over leveraged. If you can’t take a few interest rate rises then you’ve probably bitten off more than you can chew.

    There’s plenty of signs of conspicuous consumption in our city and this leads me to believe there are plenty of people with money to fuel the top end of the market. I saw a lineup around the block for Holt Renfrew a couple of weeks ago. Take a look at the number of European cars in this city, there’s people here with lots of money (sure some of it is credit but its there nonetheless). If more people were hurting on their mortgages you wouldn’t see this level of conspicuous consumption around the city.

    Still as tqn said, there’s no right answer, if you’re happy to rent, that’s a good choice too.

  56. The unthinkable"Renter"

    Well at 5% down I would have nothing to lose to buy in now.

    The return on my cash is allot more stable.

    Thanks Skeptic, I appreciate your point of view through your eyes. I thought I would get an answer like, “the paper says that homes will reach 1.2 million by 2010”

    Thanks again 🙂 for the reply

  57. The unthinkable"Renter"

    Return on my cash, I mean on investment return.

  58. e

    Skeptic:

    stock markets DO follow fundamentals. it is the psychological factor (a.k.a. the guessing game and speculation) which makes things stray away from fundamentals, but over the long run, they do follow.

    it is all speculation as to the cashflows and growth of the companies which drive the prices, but the fundamentals are in place whereby given all things equal, people will pay more for a company with a greater return on asset than one with less.

    the stock market is very subject to overvaluation (hype/overbuying), and undervaluation (fear/overselling), but over the long run, the price movements track the fundamentals of the companies.

  59. Ulsterman

    To be a pedant…percentage increases and decreases are grade 8/9 math material not grade 5, and most kids find it quite tricky 🙂

    It’s worth remembering that the measly 4% annualised increase is on a massively leveraged (tax free) investment. You can’t really compare it with stuffing your savings in a GIC and achieving 4% (taxable) gain.

    How many of us would have had $360k to pop into that GIC? And yes, i get it, leverage works both ways.

  60. The unthinkable"Renter"

    Ulsterman, there are operating expenses for the average home and mortgage that are higher than my rent. It’s not just leverage here, It’s balancing costs and looking at if it’s really worth a negative cash flow investment.

  61. tqn

    “…….if you are thinking to get in the market now, think again.”
    Also true for some if they are not ready.
    And I forgot to list the sourgrape type as well!

  62. Deedub

    …stock markets DO follow fundamentals…

    Study after study has demonstrated this is not the case. The primary reason is that NOBODY KNOWS what the fundamentals actually are until long after the fact.

    Which is exactly why over/under-valuation happens so frequently – everybody is guessing.

  63. Skeptic

    e, yes, I’ll accept that over the long term, things trend in the general direction of the fundamentals (both stock market and real estate), however I don’t see that one day we’re going to wake up and suddenly home prices are determined by rent value x some preselected multiplier.

    Lots of stuff will likely happen over the long term, I think there’s likely to be strong pressure on income growth (;-)) and also on rents over the next couple of years.

  64. robchipman

    Domus, you’ve absolutely confused me again. You’re becoming a master. You see, you say some things that verge on intelligent, and then say something so off base that it makes me think I’m missing the point. Then I re-read it and think, no, this guy is clearly off base.
    Example:
    “lately more than 90% of price changes are reductions in Rob’s areas”
    That is clearly inaccurate. When called on it you even supplied the proof:
    “Friday, June 29th:
    “There were 124 price changes, of which 20, or 16.13%, were increases. ”
    That’s 83.87% decreases.
    Thursday, June 28th:
    “There were 165 price changes, of which 47, or 28.48%, were increases”
    That’s 71.52% decreases.
    Wednesday, June 27th:
    “There were 93 price changes, of which 7, or 7.53%, were increases. ”
    That, finally, is 92.47% decreases.
    Monday, June 26th:
    “There were 109 price changes, of which 13, or 11.93%, were increases. ”
    That’s 88.07% decreases.
    4 examples, all provided by you. 3 of them disprove your earlier statement. I don’t get it. What am I missing? Are you crazy like a fox…or just on the payroll?
    Next you lay on the small percentage drops on big items are bigger than big percentage gains on small items. Fair enough, but…
    Buy in 2005 for $360,000.
    In 2007 its worth $486,000. Great, but we aren’t selling, so its a hypothetical profit.
    I’ll go along with your assumption that the current trend changes this month (no indication that it has done so yet, but for the sake of argument let’s pretend). Over the next 18 months the market retreats 15%. The house drops $72,900 in value, reaching $413,100.
    The buyer is still ahead, right? He actually hasn’t lost money. He’s made $53,100, right?
    How much did he invest? You need to know that to calculate return, don’t you? If he paid cash for the property he’s made 14.75% over 4 years. Not great. Mind you, he also either had free rent or a rental cash flow.
    Of course, if he bought with 40% down in 2005 he only invested $144,000. He mortgaged $216,000. He made mortgage payments of around $1200/month. Who knows? Say he bought that in Maple Ridge. He’s got a suite bringing in $750/month, and he’s buying for less than a lot of people pay in rent for similar accomodation.
    $144,000 down in ’05. $360,000 purchase. $413,100 in ’09. OSB of $196,000. That’s a little closer to a 50% return over 4 years. Probably closer to 40% when you add transactions fees.
    And in case you want to complain about me making use of leverage, let me quote you once more:
    “To be precise, let’s say that you had to also service a mortgage at 5%, pay realtor’s fees and taxes”. (Yes, I included taxes, mortgage and commissions).
    So, colour me confused. 100% minus price increases of more than 10% equals less then 90%, not more, and your horror story of only a 4% return doesn’t take into account leverage or cash flow (and the guy comes out ahead anyway). I’ll leave it at that. Maybe you can explain.

  65. LesserApe

    “Study after study has demonstrated [stock markets do not follow fundamentals].”

    Interesting point. I know little about real estate, but know a lot about the stock market, and I think you’re completely wrong about this. Could you point me to a study that shows that the market doesn’t follow fundamentals over the long term?

    For a market that you say doesn’t follow fundamentals, it sure seems to follow fundamentals closely — I’d say that at least 90% of stocks are trading within 10% of their intrinsic value. So I’d be really interested in hearing an argument that it doesn’t.

  66. Ulsterman

    The unthinkable”Renter” i understand that it’s about balancing costs etc, but in this instance the buyer made 413-360=53k minus expenses. if they’d put down 10% (36k) and say their cost were 17k, then they’ve made 36k tax free profit on an investment of 36k. Not too shabby for 2 years.

  67. Snick

    “I had a cab driver asking me advice on buying a place recently, his family is helping him with the deposit.” -Skeptic

    Well, as we all know, cab drivers and shoeshine boys know everything.

  68. The unthinkable"Renter"

    Lesser ape do you think real estate can fluctuate both ways as does the stock market?

  69. Snick

    “Study after study has demonstrated stock markets do not follow fundamentals.” -Lesser Ape

    Well. if I had to take someone’s advice on this one, I’d say that John Kenneth Galbraith was correct when he claimed that the stock market was a “lagging indicator” rather than a “leading one”.

    Read, “The Great Depression”, one of his more well-known books for an even better explanation of his thoughts..

  70. Snick

    Oops, silly me. I just re-read your comment. YOU are correct. They don’t, (stock markets) follow fundamentals…necessarily.

  71. Snick

    Uh oh. I was right in my first comment. You weren’t. Sorry. Wine and all.

  72. Domus

    Rob,

    the price changes that are decreases maybe 80% rather than 90% of the total. Still, does not strike me as a great number for someone who has a lot of money locked in RE.

    As for my little example, I did not mention leverage because there is a whole array of possibilities when it comes to RE investment and they all have their benefits and costs. I guess that avery small downpayment (high leverage) would have on paper the highest percentage ROI. I am always quite surprised by people using that argument, as they forget to mention the high costs of servicing interest when heavily leveraged. Where do those appear in your discussions? Or the banks let you leverage with their money for free?

    I must say that the past 6 years of easy money after Greenspan and 9/11 have made leverage very cheap: that is coming to a close and we are going back to normal times where there is a real cost of servicing debt. Include those costs (plus taxes, condo fees that in many cases exceed $300 a month and other running costs) and that 15% drop in the example becomes a very big deal for new buyers.

  73. Domus

    …forgot to mention, hope the island was good.

  74. Skeptic

    Snick: “Well, as we all know, cab drivers and shoeshine boys know everything.”

    Yeah, that’s why he was asking my advice.

    Domus: “the price changes that are decreases maybe 80% rather than 90% of the total. Still, does not strike me as a great number for someone who has a lot of money locked in RE.”

    Can you point to a time in the past when this was any different ? If nothing’s changed, nothing will change.

    How it works is that sellers want to get the best (highest) price for their property. Sometimes this means that they list it above the real market value and hope they get lucky. If they don’t get lucky they reduce the price until it sells. Remember, its the selling price that is important, list prices are less relevant.

  75. The unthinkable"Renter"

    Everybody expects the 1.2 million Skeptic. I think these sellers are expecting june/06 numbers.(peak)

  76. LesserApe

    Yep, I think real estate can fluctuate like the stock market. Obviously, houses don’t trade as frequently as stocks, so the small fluctuations don’t happen, but the big ones can. (That said, I know a lot about stocks, and little about real estate.)

    So Snick, what makes you think that long term, the stock market isn’t a weighing machine? Even if the stock market reflects fundamentals at a delay, as you imply, it’s still reflecting fundamentals.

    I’ve noted that you have added the word “necessarily”. If that means “occasionally the markets don’t represent fundamentals, but most of the time they do”, then I’d agree with you.

    Of course, if you don’t believe in fundamentals, it’s pretty hard, IMO, to make any reasonable argument about investing. If you don’t believe in fundamentals, then I guess Microsoft could have a market cap of $10 or $100 trillion, rather than $284 billion. It’s all the same. And then I can understand investing in tulip bulbs, since they have the same degree of non-rationality as every other investment in the world.

  77. The unthinkable"Renter"

    Yo Apeman, What you think of TMTA on Nasdaq?

  78. Skeptic

    Hey unthinkable, June 06 wasn’t the peak, not if your talking about sale prices that is 🙂

  79. The unthinkable"Renter"

    fill me in then on whats going on in prices if you don’t mind?

  80. LesserApe

    I haven’t looked at it that closely, but Transmeta looks pretty speculative at this point. It’s really unclear to me whether they have a viable business. It’s not the type of stock that I speculate in.

    The more interesting spec, IMO, will be the homebuilders/subprime lenders/mortgage insurers etc. But I think it’s still early there. (Though some smart people disagree, like Bill Miller.)

  81. The unthinkable"Renter"

    If Canada adds a fossil fuel tax to help support emission cuts to Industrial companies than this will add to inflation. Inflation and interest rates are directly related, no?

    Very interesting!

  82. Skeptic

    Unthinkable, there was a post a week or two back where price increases were discussed, perhaps Rob can provide a pointer to it.

  83. robchipman

    Domus:

    C’mon. I put the mortgage at a level that would cancel the rent. Its a wash.

    As for the price decreases, I think you have to realize that’s a pretty elementary mistake with numbers. 3 out of 4 examples proving yourself wrong doesn’t inspire the customary confidence. Own it.

    There is a theory that people will ignore, and even change data that doesn’t support their theory. If you look for examples you see it happen all the time. It goes both ways. In our little world bulls do it and bears do it. People have called me stubborn, but you’re beating me. You need to determine where your logical opinions and your emotional opinions part ways.

    When you try too hard to make a point I think you start to fail. Let’s face it: most of us agree on te basics. We’ve had a great run in real estate recently, and this market is bound to change. If it drops substantially there will be a chance for people who are currently priced out to buy in and get more for their money. If it continues to climb then something else will have to give. I don’t think anyone will bother to dispute that much. Its what comes after that becomes contentious.

    I asked you earlier if there were alternate historical outcomes to a runup like ours. You indicated that there are not, and that we will see a large enough correction to make a big difference to buyers.

    History doesn’t show that, at least from what I can see.

    ’81-’82 we saw a decrease in price of roughly 40%, after a runup of 130%-140%. The run up took at least 4 years, but most occurred in 1 year (’77-’79 were almost flat). The drop took 2, followed by two years of stagnation. It wouldn’t have been too hard to time that market.

    From ’84-’90 we saw an increase of about 150%. They dropped about 16% over 18 months. I had clients who were waiting for a repeat of ’82. It didn’t happen.

    From ’91-’95, while they waited for an ’82 style trough, we gained 70%. That dropped 11% in a flash, and then entered a stagnant, up and down market for 7 years. Market timers had a pretty easy time picking the bottom – it lasted so long. The benefits of waiting really weren’t there, however. If they had simply bought in ’93 they would have done better.

    Since 2002 we’ve seen about a 125% increase.

    I wouldn’t make the argument that we have clear historical patterns (other than, broadly speaking, bigger ups and smaller downs over varying time frames) because I don’t buy such simplistic analysis. I’d argue, as I have with you, that today’s run up can have various different futures.

    But, if we had to pick a similar pattern, wouldn’t it be the 6 years of ’84-’90? We rose 150% in 5 1/2 years. Right now we’re at 125% after 6 years. Is it impossible that we repeat the ’84-’90 and ’91-’95 combo? I’m not saying we will, or betting we will, or even dreaming we will. I’m just asking: is it possible? And if so, that possibility is a repeat of an historical event, isn’t it?

    So maybe I am being picky. Maybe 80% is the same as over 90%. Maybe leverage isn’t important, and isn’t a fair consideration. And maybe, historically, there has only been one outcome to a run up like the one we are currently experiencing. That seems to be your position, and perhaps its a fair and valid one. It just seems that the data doesn’t support it.

    (BTW, over a price increase rate over 10% strikes me as emblematic of a strong market, not a normal market. Price changes are evidence of pricing errors in one direction. Pricing errors in the other direction are self-correcting and show up as over-lists).

  84. Domus

    Rob,

    I could concede some of your reasoning if you were comparing everything in real terms. But that’s not the case: a 150% increase in an environment with 8% inflation is still smaller than a 120% increase in an environment with 2.5% inflation. The difference is clear: with inflation, your mortgage payments shrink really fast. Without inflation, they can haunt you for years to come.

    PS Small note: if anything, I did write down all the relevant data about price changes. I am clearly not holding info 😉
    To say more, I really don’t know how everything will play out after the current peak in prices; to me there are 2 scenarios which can bring back Vancouver to long-term equilibrium:
    1) Inflation does not grow much, and neither do rents. Nominal prices have therefore to come down. People holding houses are screwed.
    2) Nominal prices stay where they are or stay flat: inflation perks up and so do rents. People holding cash are screwed.

    I can tell you that much: someone is going to get hit hard. It’s up to central banks to decide who that is. I would not bet on either outcome at the moment.

  85. Annon

    “Since 2002 we’ve seen about a 125% increase.”

    What makes Vancouver housing market healthy when wage increase is so small and housing price increase is 125%? Could it be one of the following:
    1. There are a sudden increase of money loaded immigrants
    2. A portion of the population just somehow got very rich.
    3. M3 (easy credit) is in play. The number of people in debt because of house purchases has grown quite significantly.

    If it’s case 1, the market might never go back down.
    If it’s case 2, the market likely won’t go back down.
    If it’s case 3, all we need is a bursting of today’s bubble economy. Taking big mortgages, one better hope that they will not lose their jobs until they pay off their 30 year loans and that the economy only goes up and well forever.

  86. sutluc

    Re. Chilliwack, mentioned earlier in the thread, I live there.
    Affordability is relative. I make decent money for the area, and I find real estate unaffordable. People from Vancouver may look at the prices and find them good, but as a resident I find it much cheaper to rent.
    I looked at buying this spring and did find that the banks were willing to lend me more than I thought I could afford, for whatever that’s worth.

    In all honesty the thing that originally attracted me to the place, the country small town feel, is rapidly disappearing. If I could talk my significant other into leaving for points further inland I would.

  87. /dev/null

    “If nothing’s changed, nothing will change.”

    Skeptic, you can’t actually believe this statement.

  88. Deedub

    There is a name most here will recognize. His study from the early 80s was a watershed moment in understanding and estimating stock market risks. The conclusion he came to is one that pit traders and market makers have known in their bones for a long time – stock markets are orders of magnitude more volatile than changes in “fundamentals” can explain.

    His name is Shiller.

    It shouldn’t be hard to see why. “Intrinsic” value of a company is based on projections of future earnings. People – especially those inside the company itself – are notoriously poor at predicting future earnings. Therefore they are by definition poor at estimating the current intrinsic value of a company, which in turn drives tremendous mispricing in the stock market.

    As accurate information becomes visible in the rear view mirror, prices react violently to changed perceptions of future earnings.

    Add in all the Tversky and Kahneman findings and it simply isn’t rational to hold on to the belief that markets are rational. It’s not what they are built to do, nor is it how we’re built to act. The most accurate way to describe market actions – and this appears to be universal across all investment classes (debt, equity, capital) – is that of lurching from one misconception to another.

  89. tqn

    “I can tell you that much: someone is going to get hit hard. It’s up to central banks to decide who that is. I would not bet on either outcome at the moment.”

    I thought you were the one who is gonna decide. No?
    Why not bet on it? You mentioned before it will not happen in the next 12 months, but will happen in the next 36 months. If I were you, I would not hesitate to bet on it.

  90. e

    while it may be true there was a 16%, or 40%, or whatever correction in certain years (i.e. ’81, ’95, etc), don’t forget that this is the big picture. different areas, and different inventory in GVRD move at different rates, so up 20% in one, down 20% in another, and net is 0%.

    if you look in 95 (supposedly 16% correction?), and look at some high end houses, you’ll see from peak list price to selling price, after a few price drops, there were some pretty drastic (>16% decreases).

    also, don’t forget that the graph most people refer to is that “benchmark price” graph. this graph showed an 8% increase in ONE MONTH in benchmark prices in GVRD as well. however, most would agree that their properties did not appreciate 8% in the past month.

    if you want a really good handle, then you have to compare actual similar inventory over the years. the benchmark price graph is just the “average” house. but we all know there is no such thing!

  91. e

    rob: just wanted to clarify re: your example, at $413k, you mentioned they still made $53k.

    after commission ($16250 after GST) and property transfer tax ($6260), and legal fees ($700), it is likely $23k. i think its necessary to include these frictional costs.

    with all cash thats a 6.4% return over 4 years.

    but as for free rent? i think to claim that it is free, you have to include property tax ($1500/yr with home owner grant). hence the gain is $23-6k = 17k. there are also repairs/upkeep (which landlord usually pays), but we’ll ignore that, and assume for $360k in 2005 it is a house (no strata fees), but also relatively new. which is pretty doubtful anyway 😉

    so i think the actual scenario is.
    $17k gain.
    4.7% return over 4 years (1.15%/year. not bad!)
    but with free rent.

    this is still only slightly better (1-2%) ahead than if they are an investment dummy and can muster 5% (albeit guaranteed) return, and apply that toward rent.

    if your scenario were to unfoled, i would have mustered that with a competent investment advisor, since 2005, they would have been better ahead if they did NOT buy at 360k in 2005.

    of course owning one’s own home has its own pros/cons, so that is more important than these numbers.

  92. e

    rob: sorry, just wanted to clarify your 40% down scenario as well. with the 23k net profit, with 40% down, it is a 15.9% return over 4 years (3.75% return a year — still not stellar).

    but no longer free rent if they have a mortgage. even with the suite, $1200/mo mortgage + $150 ppty tax – $750 suite = $600/mo rent.

    so they get a subsidized rent out of the deal, which still isn’t bad.

    but if there are people who want to argue the rental point, then that balance of the house could have probably rented $900 (i.e. the unsuited portion). so rental is a $300 premium.

    but assuming the guy goes for the 5% guaranteed investment (whether he is a dummy or just risk averse), then with the $144k down, then 144k *(5%-3.75) = $1.8k = $150/mo subsidy.

    so he is better off with leverage to the tune of $150/mo, or $1.8k/yr.

    of course if the guy could get 6% return guaranteed (bonds, etc), then the difference is negligible.

    the guy is still better off buying in either case (unless his investment returns (i.e. stocks/bonds) are greater than 5-6% — and most advisors since 2005 have been pulling 10-15% returns conservatively — but we’ll just give rob the benefit of the doubt). however, the difference may not be as large as one may think — even with a modest price drop of 15%.

  93. tqn

    e,
    A couple points:
    -in that $1200 mortgage, a portion of that serves toward principal.
    -if the guy used the entire amount of money for GIC, he has to live somewhere, and he has to pay rent to his landlord.

  94. robchipman

    Domus:

    I’m not arguing one particular outcome. I’m saying the future, as always, is uncertain. I’m just trying to get you to move off your earlier position of only one outcome, based on historical patterns. It loks as if you are moving off your original position. That’s good.

    I’m wondering now if you could try a definition of long term equilibrium. I’m not trying to trap you with this – you know that I have specific metrics that I look for, so you have to assume that I don”t really believe that anything goes. I’m curious what you (or anyone else) considers long term equilibrium.

    e:

    You have to remember that I’m not the guy who says “History is my guide”; I’m the guy who says the big picture is very confusing and just looking at past events is too simplistic.

    Also take note that the 40% leveraged return took sales commission and taxes into account. Your comment about the benchmark having limitations is accurate. Trying to show that someone hasn’t made a fistful of loot on real estate between ’05 and today just won’t wash. I’ve got over 200 real life examples in my office, including my own properties. The past few years have been wicked.

  95. e

    rob: i never doubted that either (i’ve made more than my share as well), and that wasn’t my intention. i was just clarifying your calculations.

  96. Joshua

    “Trying to show that someone hasn’t made a fistful of loot on real estate between ‘05 and today just won’t wash. I’ve got over 200 real life examples in my office, including my own properties. The past few years have been wicked.”

    Glad to know that you made “fistfuls of loot” while the rest of the city suffers under the burden of unrealistically high real estate prices.

    Disgusting.

  97. Anonymous

    e: “look at some high end houses, you’ll see from peak list price to selling price, after a few price drops”

    Please post the link.

    If the bears have all been making so much money on their GIC’s and specialist portfolio with their advisors, etc, why are they upset about RE prices, surely they’ve all got wheelbarrows full of cash looking for somewhere to park.

  98. tqn

    “Glad to know that you made “fistfuls of loot” while the rest of the city suffers under the burden of unrealistically high real estate prices.
    Disgusting.”

    Rob – are you the reason that Vancouver RE price getting this high? Sigh !

  99. robchipman

    Joshua:

    That really is pretty funny. Last time I looked you weren’t there to pay my bills! 🙂

    What exactly is the problem? Are you homeless? If so, that is a problem, and we should all get together and solve it.

    Or is the problem simply that you want to own someone else’s property without paying them what they want for it? Is there anything else you want, but don’t want to pay for? 🙂

  100. Joshua

    Rob:

    First of all, to quote Queen – I want it all, and I want it now. 😉

    Seriously though – I shouldn’t have added the “disgusting” part, because it added a stronger tone to my post than I intended. That being said though – the point that I was intending to convey is that I *personally* feel that real estate is not a commodity that should be allowed to be traded like stock… that the spec/investors in the RE market cause massive fluctuations in the value of RE which has a significant effect on what I believe is a fundamental right – basic housing. In comparison to the stock market, where the money that investors are making/losing is in direct relation to others who are playing the same game, the money that is being made/lost in RE speculation is costing many people who don’t want to play, but just want to live.

    So, to answer your (somewhat silly) question 🙂 : of course I don’t want to own someone else’s property without paying them what they want for it… I just think that “what they want for it” is unrealistic and I put the blame squarely on those who invest in “non-primary residence” properties in the hopes of making a profit. You (and others) think this is OK. I (and others) don’t. A philosophical/political difference of opinion, that I’m sure we could debate all day without changing each others opinions. 🙂

    Joshua

    ps. nope, not homeless, but thanks for the concern.
    pps. why would I pay your bills? 🙂

  101. awum

    Empathy, Rob!

    Have we or have we not watched the cost of a basic human need (i.e., shelter) skyrocketing in Vancouver? Unless you own property, or you develop and/or sell real estate, that’s just outright bad news. Even for some of those homeowners (e.g. if you have kids who you’d hope would have the opportunity to own a home locally) the news ain’t all silver lining either. Some of us might even (legitimately) believe that the long term social effects of eroded affordability are pretty bad, regardless of our financial interest in the market.

    So I wouldn’t expect a congratulatory response on your financial success since 2002 from everybody. I don’t like Joshua’s approach, but there is something real behind his comments which renders your last comment somewhat less than dignified.

    Further, smileys aside, it takes a certain kind of attitude to imply that someone who begrudges folks making money off of housing price inflation is somehow looking for a handout. Some of us might (legitimately) believe that it ain’t simple free-market economics that put some of those dollar bills in RE pockets over the last five years. Some of us might (legitimately) believe that housing affordability should be a legitimate aim of urban planning.

    Rob, I won’t deny your work effort or your intelligence in invest in RE in general, but you (and others) have been lucky these last few years and I can tell from your comments that you know that. If someone else hasn’t been so lucky, is it really such a great idea to thumb your nose at them?

  102. new investor Rob

    Hi Rob

    I’m new to this blog. I really like it. I like that you start it off by just posting the numbers.

    One thing that would be nice is to be able to easily track the change in your numbers as time goes by.

    Can we chart these number some how? I would be willing to help if you could provide me a spread sheet of the historical numbers. I have access to some very nice charting tools that might help the conversation.

    Rob

  103. e

    Anonymous: sorry, i don’t have any addresses on hand right now, but ask a realtor to run you sales report history on properties which you know have changed hands (especially richmond/westside/burnaby — look in early 90’s to 2000’s for the newish $1M+ houses (i.e. 4000+ sq ft) which have changed hands throughout the years). you should have a good idea; but i don’t think those listings would actually show you the changes in the LP (except for the most recent change). in the case where they go from like 1.368 to 1.3 to 1.1 to 998, it would only show you the 998 LP, and previous LP 1,099. so to most it would only look like a 10% decrease, but if you were following it at the time, you will know it is much more.

    i no longer have access to the system so i cannot run you the reports. maybe some realtors here may want to run one for you, or have some examples?

    my colleague was once active in the markets in the 90’s with the asian buyers, and these are the kind of properties he had to follow for his clients.

    sorry i couldn’t be of more help. my colleague helped buy my house (sorry, i don’t want to reveal my area) and i got around 30% (purchased 1996) off the high list price (around 1993-1994), but i did not buy at the bottom! yes, the house was brand new, and it sat for 3 years unsold). in 1999-2000ish, there were houses around mine which were newer and bigger and nicer going for less than mine (5-10%). so that would have valued mine probably 10-15% less than i paid for it (which was already 30% from the peak).

    the only reason why i bought a house at the time (i was out of tune with the market then) was because another colleague of mine was telling me how he bought his also new house at 41% off the peak price (incl GST). back then most new houses you had to pay GST on top. nowadays it is somehow included. don’t know why. maybe they simply just include GST in the price so its cleaner.

  104. vintage

    Joshua,
    This blog is for people who make money (or think they do) buying and selling real estate.
    This city is for people who make money (or think they do) buying and selling real estate.
    This lifestyle is for people who make money (or think they do) buying and selling real estate.

    The sooner we finally realize that it is simply all about money, the less we’ll suffer. Forget all the old stale principles of love, happiness and somesuch other bullshit. If you haven’t made any money on realestate around here, you are a loser and Rob will never want to be your buddy.

    Fortunately though Canada is a big country and there are plenty of places outthere where shelter is still exactly it – a shelter. A place where one can live and raise a family and, god forbid, be happy without all the money they made (or think they did) on real estate.

    But it ain’t here and I know is unfair but we just have to move out and let the smart investors brew their own lattes, pack their own groceries, cut their own hair, fix their own cars, teach their own children, drive their own buses, dryclean their own clothes etc, etc, etc…

    No smilies in this post.

  105. Joshua

    Vintage: thanks for the pep talk. But, uh… what the hell are you talking about? Since when is this blog or city “for” anyone?

  106. Joshua

    …or were you being sarcastic?

  107. Joshua

    disregard my last two posts… i need a coffee…

  108. awum

    … better yet, Joshua, why not reach for some bud… er, I mean a “Bud”…

  109. Annon

    How did we end up where we are now? It takes a number of people who can afford (by ways of cash or mortgage or whatever) today’s housing prices to get to where we are today in RE market. And where do they get money? Looking at historical trends may tell you that there will for sure be up and downs. But if one is interested in finding out when the down turn would come, one must first find out what the source that fuels the market. With the TSX partying like there is no tomorrow, it’s hard to see a down turn on RE yet. The amount of money in the market is just too much. In fact, there is so much money that everyone and their dog can find a job. I have never seen a labour market this strong before. I have seen many under qualified IT people got placed because there is just not enough qualified people.

    Some people think the the hikes of gas price is a shortage of gas or because of China’s demand. If there isn’t this much money in the market, how can the price go up at all. Who is going to pay this much? Where do money come from? Who ever is paying need to have the money to pay. When micro does not seem to make sense, looking at macro might help and in this case, I think it seems to work well.

  110. Annon

    And in case some of you don’t know, the rest of the world (including Canada) also lowered their interest rates after US lowered their overnight rate to 1% in June 2003. No country that has significant export business with US would want currency exchange rate to go up too much or too fast against USD. So this easy credit (too much money) thing, is world wide. And RE bubble is also world wide.

  111. The unthinkable"Renter"

    Thanks for all the input to my comments, Skeptik and all. I really enjoyed looking at the arguement of own/rent from both sides of the fence without the term bull/bear being used.

    RE agents seam the furthest from reality though.

    I Like Rob though, I think he’s down to earth and hopefully he hasn’t forgotten what it’s like to have a mortgage in Vancouver in 2007, being a tradesmen, earning $30 p/hr with 100k down on a humble $620,000 bungalow. C’mon bud get with reality. If Vancouver is only for the rich then who the hells going to be left to pump gas, paint houses, police the streets, clean the hospital. etc.etc.

    I’d rather be in 1987 earnin $20 p/hr with a $100k mortgage than be here in 2007. I think you can agree with me Rob.

  112. ontheisle

    “Rob, I won’t deny your work effort or your intelligence in invest in RE in general, but you (and others) have been lucky these last few years and I can tell from your comments that you know that. If someone else hasn’t been so lucky, is it really such a great idea to thumb your nose at them?”

    good post awum, there’s nothing worse than someone rubbing it in when it took no brains to make money the past few years. Sometimes people’s life situations like divorce,death or transfer or all 3 can take someone out of the market and if one missed a certain 2 year window in the early 2000’s then it aint fair but thats life but to snear down at someone who wasn’t in the right time to own a home but is now shut out is also pretty classless for a so called professional.

    I would also respect a guy more who made a bundle in a bear market and actually had to work for it then someone who coasted the past 6 years.

  113. Lohachitronotsompatana

    This thread is losing its focus Rob.

    Can we have some numbers to talk about!!

    Thanks

  114. Priced Out

    The self-satisfied attitudes I’ve come across in the last couple of years is what really makes me hate this real estate market. People who just got lucky talking like they’re brilliant investors because they “bought at the right time.”

    The thing is having your house worth more has few tangible benefits. Yeah, you can borrow at a cheaper rate…but you’ll borrow more…and its still DEBT. Buying up is no easier because everything is more expensive. The only way they can see that money for real is by selling and leaving this real estate bizzaro world for someplace normal.

    Here is the truth: what really makes some people pleased with their now expensive houses is the exclusivity. Their shack and patch of grass is now out of reach for most people. That’s what makes the greedy homeowners happy…and me sick.

  115. Johnnyrent

    Hey Priced Out

    Let me offer you some hope. I’m in my late 50’s, a native Vancouverite and I’ve lived through more than a couple of corrections; two of them as a homeowner on the Westside.

    I can’t tell you exactly when the market will correct, but as sure as the sun rises it will. Chances are this will be sooner rather than later – I predict it will start in the next 4-12 months max, if you want to put a finer point on it. I also predict that the market will drop at least 20%, and probably more, so hang in there. I don’t think you will be as “priced out” as you are today, not too long from now (but be patient and don’t catch a falling knife).

    No doubt there will be a virtual cornucopia of denial postings refuting my predictions but then its always darkest before the dawn, and many who hold RE in this market are in the denial stage. By the time this market begins to correct, most of them won’t even realize it until the train is well down the track. Local economists predict best while looking in rear view mirrors. We like to think that we’re different here but one thing that is irrefutably consistent is that we are all human beings with the same psychology as all buyers and sellers. When prices go beyond what all reason, rationale and fundamentals can support, they will and they must, go back down. They always have and they have been or are beginning to in all the Vancouver-comparable metro markets in the US.

    Remember, history doesn’t always repeat itself exactly, but it rhymes every time.

  116. Priced Out

    20% off is a good start but it won’t get me buying, unless its after a couple of years of double-digit wage inflation (including my wages).

  117. News Flash

    “you (and others) have been lucky these last few years”

    Maybe partially, but those who intentionally sat out trying to time the market with their principle residence were not unlikely. They gambled and lost.

  118. mike

    Hope Rob is OK I start to worry about him when he misses his posts.

  119. Domus

    Rob,

    in which way do you think I was changing my opinion? Just curious……

    For the record: never been more certain that there will be a re-alignment of rents vs prices. This is what I said all along. I’d prefer gamblers not being rewarded by central banks, but I cannot exclude that scenario.

    After all the US, which very much sets Canada’s rates, is governed by a guy who ignores the rule of law and decides to free his criminal aidees in the face of contrary deliberations of a jury. If that can happen, then certainly it could happen that politicians freak out because of the voters’ bankrupticies and put pressure on the Fed to lower rates.

    This is all I said. Not a change of mind, it appears….

  120. ObserverX

    “Maybe partially, but those who intentionally sat out trying to time the market with their principle residence were not unlikely. They gambled and lost.”

    But what about people who sat out because they would have been overextending (by traditional measures) themselves to buy. Do you still consider them to have gambled? Perhaps it’s the ones who did overextend themselves who were the ones who gambled and just happened to win.

  121. Domus

    NewsFlash:

    the real gamblers are not the bears. They are the buyers. They decided to throw caution away and trust the market’s wisdom. This thing still has not played out completely, I would advise some patience.

  122. ontheisle

    “I can’t tell you exactly when the market will correct, but as sure as the sun rises it will. Chances are this will be sooner rather than later – I predict it will start in the next 4-12 months max, if you want to put a finer point on it. I also predict that the market will drop at least 20%, and probably more, so hang in there. I don’t think you will be as “priced out” as you are today, not too long from now (but be patient and don’t catch a falling knife).”

    Johnnyrent, great post, patience is needed,nothing better than seeing the smirks wiped clean. All I want is an affordable home to own and live in,this market is based on greed and greed always gets burnt eventually.

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