Friday Numbers

There were 208 new listings Friday and 230 sales, for a sell/list of 110.58%. Of the sales 34, or 14.78%, went over list. 12 of those were on the Westside. 5 were in East Van, 1 was in Richmond, 1  in Port Moody, 1 in New West, 7 in North Van, 2 in Maple Ridge, 1 in Coquitlam, 3 in Burnaby, and 1 in Surrey.

Average list price of the sales was $571,288: average sales price was $549,892, a difference of $21,396, meaning the average sale went for 1.73% under list price. 25 properties went for list price. One property went for 90.29%($3 million) under list while the highest over list was 15% ($152,000) over.  (The huge underlist was, I think, a typo; list price was 3,398,000, while selling price was reported as $330,000; I’m sure it will be corrected, but it contributes to the larger than average lp/sp gap).  There were 18 million dollar plus properties sold, with 3 over $2 million. Average days on market to sale was 40.

There were 74 price changes, of which 3, or 4.05%, were increases. The average original list price of price changes was $569,247; the average new price was $556,248, a difference of $12,998, meaning the average price change was -2.66%.

Inventory in my target area dropped to 11,734, while over 90s rose, reaching 2,226, a percentage of 18.97%.

0.61% of all active listings in my target area had their prices reduced today.

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67 Comments

Filed under Daily Numbers

67 responses to “Friday Numbers

  1. mike

    Jesus christ!

    Rob.. question: Why don’t you consistently publish the 14 day rolling ratios? It’s the first # I always want to see…

  2. coco

    Rob,

    What area is generating the most sales? What is price range of the majority of those sales?

    You can state prices are going up, but are the prices only going up on the lower priced properties because a lot of people are bottom feeding because that is all they can afford/qualify for at those levels?

    One can clearly see the bulk of sales are not in the million and up range, so it would be nice to see where all this activity in sales is actually coming from.

    Thanks

  3. deb

    Who are these people??? Who is doing all this summertime buying?
    Ah well !!!

  4. mk-kids

    I’m thinking back to a party or two I may have attended in University where a bunch of guys are sitting around “shotgunning” beer… one guy is guzzling as fast as he can & the others are egging him on chanting “chug, chug, chug” – the boys usually played this game until someone puked.

    This seems to me apt analogy for today’s RE market….

  5. robchipman

    Mike:

    If I miss a couple days of spreadsheet work the 14 day sell/list gets compromised. That’s what’s happened. I also do another version of that; I simply do a daily search that goes back as many days as possible (there is a 10,000 transaction limit in the db); going back 8 days from Friday the sell/list was in the 92% range.

    Coco:

    You’re right that this isn’t a market driven by $1 million+ sales. Unfortunately there doesn’t seem to be a single price range that is driving the market. I haven’t tracked it religiously, but it seems spread pretty evenly through the price ranges.

    A survey of July 26’s sales shows 252 sales. 7, or 2.7%, were between $100,000 and $200,000. 33, or 13% were between $200,000 and $300,000. 45, 0r 18%, were between $300,000 and $400,000. 56, or 22%, 39 (15%) were between $400,000 and $500,000, 16 (6%) between $500,000 and $600,000, 25 (10%) between $700,000 and $800,000, 8 (3%) between $800k and $900k, another 8 (3%) between $900k and $1 million, 14 (5%) over a million but under $2 million, and 1 (0.4%)over $2 million.

  6. Ymir

    You know how it’s polite and politically correct to call someone “special” or “different” instead of just simply calling them retarded?
    I had my doubts before and I thought it was just a spin, but right now I have to say that Vancouver is indeed both special and different.

  7. satv

    right now I have to say that Vancouver is indeed both special and different.

    yes ymir !you have nailed that.

    vancouver is beautiful inch by inch feet by feet,that makes hard to capture by kodak reels,creative webcams,and sony video cameras thats why at the end people just give up. buying here is a bottom line for many. no wonder usa market is down,because those americans are riding bikes on head of this city blackcomb whistler .june 2007 almost repeat 2005, and july damn this is very hard to measure r.e. magnitudes just check the report in next few days.I think when vancouverite’s were sleeping then washington and alberta took over vancouver.

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  8. TI

    Interesting.

    Many sales reported during last few days of July.

    We may call this the effect of last few days of month.

  9. crasher

    deb,

    “who is doing all this summertime buying?”

    Pure and simple, PRE-APPROVED BORROWERS

    If you look at the numbers, the listings are pretty well in line with the norm, while sales have surged before the pre-approveds expire.

  10. tqn

    “Pure and simple, PRE-APPROVED BORROWERS”

    if that is the case, by the time the pre-approved group exhausted, the fall buying arrives – it’s gonna be an interesting Fall.

  11. Jay

    Read an article that said 30, 35, 40yr mortgages are having a prominent impact on the housing market/cycle. It didn’t focus on Vancouver specifically but I’m guessing they’re probably allowing more people in the local market.

    Rob: Are you seeing a lot use of these longer mortgages?

  12. crasher

    You got it backwards tqn.

    Sales normally slow down in late summer and fall, at least they have for the last few years. Unfortunately, Rob’s archives dont go back far enough, but if you check out his numbers for last fall, you’l notice that the average sales/list ratio was in the low 40% range.

  13. tqn

    “Sales normally slow down in late summer and fall, at least they have for the last few years.”

    Sales normally slow down in summer (Jun-Jul-Aug) and pick up in the Fall (Sept-Oct) and slow down in Nov-Dec.

    Which observation is likely correct?

  14. tqn

    by the way, the achives are still here:
    http://rireb.blogspot.com

  15. -A-

    Rob, you said:
    “-A-

    When the market turns I’ll start pointing out good purchase opportunities.”

    How good of you, thanks, but instead , could you let me know when it’s a good time to sell?

  16. robchipman

    -A-

    You predicted that when the market changed I’d pull the blog on the blog after a staged argument with someone (a variation on your “fear”of phony posters, I guess). I just pointed out that I’ll be around as long as blogging is interesting, regardless of the market. I realize that I serve a purpose as a bull in your bubble scenaro, but I’ve been through several types of markets, and God willing, I’ll go through some more.

    Its a good time to sell when you need to get rid of property and can do so at a profit. High prices, on their own, are not enough reason to sell RE. Personal circumstances, which vary from person to person, are huge considerations. Remember, you can withdraw equity from real estate two ways.

    Jay:

    I don;t see a lot of longer term ams. Borrowers that I run across don’t love them, and the guys who need them run into other qualification problems as well (a lender may lend on a building with a 25 yr. am, but pass it by as too risky on the 40 yr. am). Nothing is quite as simple as it seems, eh? They make it more affordable to borrow, but then add restrictions. Go figure!

  17. -A-

    Rob, thanks for the quick reply. Pretty much the canned answer I expected.

    Although I must say you are losing a little bit of your edge.

    I thought you would end your reply with:

    “Consult with your realtor before buying or selling; He/she is a professional, who knows the market and can best advise you”

    Then you could have told me where I could find such a good realtor.

  18. robchipman

    -A-

    I think the problem is that you carry on conversations with yourself in your head, where you play the roles of different people. Then, you compare the actions of real people with your imaginary friends, and find that the real people don’t measure up. I can’t help you with that.

    Your approach to real estate may be sophisticated, but the approach that you share certainly isn’t. I know you’re better at asking questions than at answering them (I assume you’re afraid of the risk involved in answering a question), but let’s see if we can extract some of your hidden, but assuredly sophisticated approach.

    Let’s assume that I invested $17,000 in an apartment 4 years ago. Its cash flow positive. It cost just over $60,000 at time of purchase. Its more than doubled in price (if not in value).

    Should I sell now, take the money and spend it for personal goods?

    Should I sell now, take the money and invest in another property?

    Should I sell now, take the money and invest in a non-re investment?

    Should I extract equity through mortgaging, use the funds for a second investment, and write off the interest expense?

  19. Al

    Regarding longer amortization: I recently got one to finance investment property. 35 years with NO insurance. VERY EASY.

  20. -A-

    Interesting post Rob, I sense you are a bit of a psychoanalyst, rather than a RE analyst.

    You crafted my psychological profile, and then you , a professional realtor, ask me for RE advice.
    Strange.

    However based on your evaluation I would definitely fall within the parameters of a disturbed person, and yet, although we don’t agree, we seem to communicate well.

    And that doesn’t worry you?

  21. Al

    “Should I extract equity through mortgaging, use the funds for a second investment, and write off the interest expense?”

    Rob, I also was thinking that it is a great idea. The problem is if you already have few mortgages and want to increase your liabilities without increasing your income, banks don’t feel so excited about this idea.
    How much liability do you have if you can do what you are suggesting?

  22. tqn

    A,
    You asked Rob a question when the good time to sell is. Rob offered you a bunch of question that you can use it to analyze, evaluate your own scenario when to sell. IMHO, it’s more than good. In turn, you posted:

    “Interesting post Rob, I sense you are a bit of a psychoanalyst, rather than a RE analyst.
    You crafted my psychological profile, and then you , a professional realtor, ask me for RE advice.
    Strange.”

    Are you just freshly graduated from John Oliver or some other high school? Those questions, that Rob posted, are the ones that professional realtors should be asking their clients.

    “I would definitely fall within the parameters of a disturbed person”
    It’s definitely true.

    “And that doesn’t worry you?”
    You parents should worry about you! Very much!

  23. robchipman

    -A-

    You call it psychoanalysis. I call it identifying someone who’s afraid to take a concrete position .

    If that qualifies as psychoanalysis I can’t imagine why medical school takes so long.

    Anyway…do you have any answers for the questions?

    Al:

    Its a pretty simple issue. You’re constrained by income, either from rent or from other sources. The value of the property almost always goes up faster than the rent, but its the rent that services the mortgage. The rent is the brake on growth, which is why rent controls = less rental property.

    If you throw other income into the mix (wages or other sources), you can run the property at negative cash flow and use the capital somewhere else. That depends on you having strong enough income, and high enough taxes, to make the tax deduction worthwhile. If you are in that position its likely that the bank will throw money at you. (I should also add that some people like to gamble, and so factor in higher returns from alternate investments to rationalize what others would call risky borrowing).

    What degree of liability do you have if you extract more equity than your rent will service? Clearly, that depends on the source of your other income. Self-employed guy in a competitive business without critical injury and disability insurance? That’s a lot of liability. Solid income that’s impervious to economic downturns and health reversals? Much less liability.

    The point is: do you market time and trade, or do you acquire and hold? If you’re doing the latter then you generally only sell when you’re cashing out (no heirs to handle the business, fatal illness, or concrete enough time frame to calculate retirement needs).

  24. -A-

    “Should I extract equity through mortgaging, use the funds for a second investment, and write off the interest expense?”
    Actually, this is a main plank of your spurious investment scheme, and it is a feature of the tax system which is likely to be greatly abused and the interpretation liberally applied.
    But I am sure the tax man will come to visit some of you geniuses.
    And will eventually be asking questions ranging from which marble slabs were used on the revenue property and which was used for the residence

  25. coco

    Rob,

    Thanks for posting those price ranges.

    Seems 800k plus is a sticking point/affordability wall for a lot of people.

  26. robchipman

    -A-

    O.K, that’s four questions asked, and none answered. At least you threw in an accusation that I’m recommending lying to the tax man as an investment strategy. There’s no accuracy to the allegation, of course, but don’t let truth get in your way.

    Let’s get back to the questions: sell now and spend the money, sell now and re-invest in real estate, sell now and re-invest in a non-RE investment, or re-mortgage, invest, and take the legal write off?

    Just for the record, lying to the tax man and breaking the law are not things I recommend doing.

    Coco:

    I think you’re probably right, but hey, $800+ is a lot of money (and the cure for high prices is…) We’ve seen other evidence of tht problem. People pay more for less because the total price is less. That’s what densification (oops,eco-density) is about, right?

    Active listings,right now, are 11,742. Over $800k are 2,203 (19%). Over $900k are 1,683. Over $1Million are 1,326. Over $2 million are 281. Over $18 million there’s one.

    You can do the rest of the percentages, but it looks like the list/sells at higher price ranges have to be a little softer than at lower ranges.

  27. deb

    when do you think the pre-aprooved will dry up? How many days do people usually hold these and what was the dates they likely took them?

  28. Al

    “The value of the property almost always goes up faster than the rent, but its the rent that services the mortgage”.

    Rob, as you know, when banks do their calculations, they might count only 80%-90% of your rent income (most banks even less).

    Lets say, your personal income is around $100,000Can. You have two dependents.You have mortgage for your personal residence around $200,000, personal residence value is around $800,000Can.
    You have few investment properties – condos, values around $320,000 Can each with rental income $1,300Can/month each.
    You put down 20-25% for each condo.

    With your income you would not afford more than maybe 4 investment properties? I don’t see how you can make your scheme to work. There just no more room.

  29. -A-

    “O.K, that’s four questions asked, and none answered. At least you threw in an accusation that I’m recommending lying to the tax man as an investment strategy.”

    Sensitive aren’t we?. I did not accuse you of counseling tax fraud.

    I said:

    “Actually, this is a main plank of your spurious investment scheme, and it is a feature of the tax system which is likely to be greatly abused and the interpretation liberally applied.”

  30. Coq_Mike

    Deb:

    I just spoke with a friend today who had no trouble getting a 5 year closed for as low as 5.6%. I am not sure how long the cheap money will last, but as of today you can still get it.

  31. coco

    Rob,

    Something is wrong with your blog, I just submitted a comment and everything looked fine like it was going to post, but it went into space instead.

    I only pressed the submit button, nothing else.

  32. coco

    Deb,

    The last interest rate increase was July 10, most banks raised their rates end of June, beginning of July.

    Preapprovals will run out around end of August through end of September.

    Another interest rate hike predicted on Sept. 5.
    Retail sales running at a 10 year high, plus inflation is still sticky.

  33. zed

    -A-, get a life. you and satv should have a talkshow

  34. John

    If the predictions hold true we’ll see another BOC rate hike on September 5th. Banks will then raise rates in late August in anticipation. If the current purchasing craze is a result of a rate increase then maybe we’ll see another surge of locked in buyers two or so months after the rate hike.

    I’m putting one of my properties on the market this week (bought in 2000 so it’s had a great run up).

    My situation – I’d like to free up all of the cash and put it towards other investments. I don’t want to pull out cash from the property and leverage more, just want to trade it in for something else (non Vancouver RE for now).

    Anyone who is holding out, this really has to suck, and hopefully your patience will be rewarded. I’m all for a correction. Can’t say when or how much, but with any luck you’ll see all sorts of great stuff in the bargain bin. I’m hoping anyhow! 🙂

    Anyone following the US crash and waiting for that perfect time to buy a condo in Miami?

  35. coco

    Vancouver condo presales slow.

    http://tinyurl.com/2yzvnr

  36. blueskies

    as posted on van condo info:

    article: http://www.cbc.ca/money/story/2007/07/30/housingprices.html

    quote from same: “British Columbia continued to have the highest average house price at $446,893 in June, though that was down from $454,962 in May.

  37. coco

    I especially like this quote from the article.

    “Higher interest rates and additional housing price increases will gradually impact affordability and housing demand over the second half of the year,” said CREA economist Gregory Klump.

    I can hardly wait for more interest rate increases, a great cure for high prices.

  38. mike

    I’ll never understand why Rob engages the trolls.

  39. coco

    I’m looking to buy and if I can buy something better because interest rates are going up and maybe some prices will ease, that makes me a troll? Strange concept.

  40. Coq_Mike

    coco:

    Thanks for the above link.

    That article certainly highlights one main difference from our market and the U.S., which is the number very high number of speculators they had.

    I know from talking with friends in California that during their real estate peak it seemed like nearly every second house on the market was a flip. Every guy with a hammer and 10 cents in his pocket was a real estate developer. I think these are the people that really helped fuel the strong correction in the U.S.

    The Canadian boom seems to be more like buy and hold.

  41. Noname

    Coq_Mike said – “The Canadian boom seems to be more like buy and hold.”

    I think this is what the bulls vs. bears debate fundametally boils down to.

    Bulls argue that prices are substantiated by real demand (people wanting to live here and willing to pay the elevated prices for the rest of their lives).

    On the other hand bears are saying that speculation is rampant (especially because of the Olympics) and demand is basically borrowed from the future.

    Noone can really tell what the degree of speculation is outthere and that’s why these bull vs. bear debated become very exhaustive.

    Personally, I think there is enourmous speculation outthere. Not the california style speculation where someone unloads their investment 6 months after purchase but more like the buy and hold till Olympics style.

    Anecdotally, I personally know of a number of people who are planning to unload their properties around the Olympics expecting that prices will keep going up until then. And, I don’t even know a lot of people.

    Noname

  42. coco

    I think there is probably still a lot of flips around, but maybe the trend is slowing down with rising interest rates and more inventory to choose from?

    A flip in our neighbourhood bought for 595k last year, listed for 769k this spring is now been slowly reduced to 699k and still has not sold. Given the money the owner put into the renos, realtors selling commission, the original property transfer tax paid, you can call this a flip/flop.

  43. robchipman

    Al:

    I can’t see that we’re disagreeing too much, except that I haven’t proposed a specific plan for anyone (there isn’t a single right answer to the questiosn I asked -A-, in other words).

    What portion of rent banks count as income doesn’t matter, in that rent is a brake on growth more than the engine. If they counted more the process would be easier. If rent grew faster the process would be easier. Neither happens. Therefore, your ability to re-mortgage is limited by your total income.

    The risk revolves around how stable your other income is. How much you need the tax break is also an issue. Compare your scenario to a single person working offshore making big dollars, with no dependents, but paying tax in Canada (this describes one of my clients); re-mortgaging at a cash flow loss based on other income is much more attractive (and possible) for him than it is for your example.

    And that’s really the point. Do you market time or approach your particular situation individually? Right now some people should definitely sell, while others should hold. A lot of people should arrange financing at current value levels and attractive rates, in anticipation of future acqusitions (the timing of when they apear isn’t so critical – being prepared is).

    In your particular situation I’d say, first, pay off the principal residence mortgage. Second, accept that a cash flowing property at 25% down is outstanding in this market at the best of times (translation: it can be hard to get good properties here with that degree of leverage w/o going neg cash flow, but it has always been thus, and you don’t need that much leverage to do very well). Third, if you want more growth, and your non-rental cash flow is limited, you really have no other option than to increase your rents. Fourth, we’re in a challenging acquisition time; that’s the flip side of great appreciation. Patience. If you can’t get more now, husband your resources. Your equity has grown high enough for now (in all probability) – you need rents or other income to catch up, and that simply takes time (remember, even if prices drop 90% tomorrow, if you don’t have some kind of free cash flow to service mortgages it’s irrelevant – you’d have to pay all cash for clear title, no mortgage, to acquire the deeply discounted bargain properties.

  44. robchipman

    -A-

    4 questions asked, none answered. You’re certainly consistent.

    We both know what you said, but I’ll include the end of the quote as well:

    “Actually, this is a main plank of your spurious investment scheme…But I am sure the tax man will come to visit some of you geniuses…asking…which marble slabs were used on the revenue property and which was used for the residence”

    The implication seems pretty clear to me, but maybe I misunderstood your allegations.

    Anyway, you were commenting on the “canned answer”quality of the response to when is it a good time to sell. I’m still curious: do you have an actual position that contrasts with mine, or are you just chattering?

  45. robchipman

    coco:

    That seems to happen from time to time with wordpress. I’ve lost whole posts. I can’t say why it happens. Sorry 😦

    John:

    Thanks for answering one of the questions I put to -A-. You’re picking “sell, pay cap gains and put the money to work in a non-RE investment”. That’s a valid approach (as mentioned earlier, there is no single “right”answer to the 4 questions – the answer depends on your situation).

    Mike:

    I engage trolls because my character is flawed 🙂 It may be a no win battle, but I still think its worthwhile answering the bell. (coco, I don’t think anyone thinks you’re a troll).

  46. Al

    Rob, I understand that you have image of conservative investor who beleives in long time holding.

    But sometimes, it sounds like you don’t consider RE as real investment – the tool to make money. Seems like you mostly consider it as a tool to reduce taxes (wich is also important, of corse).

    Regarding idea of remorgaging investment property: I must admit that it makes sence in some cases. Yes, for long term holders “arranging financing at current value levels and attractive rates” might be a good idea.

    I also like that doing remortgaging, investor get cash now, but should pay taxes on these money later – when selling the property.

  47. robchipman

    No, Al, I’m not giving you a clear picture if you’re getting that message. Tax breaks are great, but they are a secondary goal. The investment doesn’t stand on tax breaks alone; they simply increase the return (depending on the individual’s position).

    Real estate is about making money, and it has a pretty good track record.

    The other challenge when re-mortgaging, of course, is that more properties more highly leveraged equals more growth, but at the end of the day we really want free cash flow. Making the change from one state to the other is the long term exercise.

  48. Annon

    Is this just well known or is it just me? To push the prices up (whether speculation or buy-to-hold), transactions need to complete with cash and/or approved mortgages. In either case, people either have loads of money or a super well paying job to support a mortgage. So the market can’t just go up unless there is money in the market (or people’s bank account/secret vault?). The impression I get from this blog is as if the market will go up as long as buyers feel like it regardless of whether they have the ability to do it. If there is no money in the market, there is simply no money to push up the market. And as of now, the market does appear to be still quite strong. Lots of people have jobs and get raises and get decent returns on their investments … etc. I do believe the RE market will cool down even if interest rate does not go up and just remains the same.

    Has anyone ever wondered why should people worry about deflation? To the (super) wealthy and politically influential, who wouldn’t want to try everything to stop their asset value from falling? What’s the point of inflation? If you look far enough into the inflation scheme most central banks are doing, does it not mean that all we get in the end is just higher and higher numbers on the cost/price of things with no real intrinsic value in it?

  49. -A-

    Rob:
    “Real estate is about making money, and it has a pretty good track record.”

    Another point of contention, I believe it should be about people, families, and a safe, healthy and peaceful place to raise communities.

    Not for speculators like you. If you want to make money, why don’t you invest in industries where appreciation is propelled by innovation?

  50. Annon

    Cramer says “Just walk away”…

    And he says it’s a good thing too. Though I am not a fan for Cramer but this is probably one of the few things that he is right. He tried to endorse Bear Stearns’ collapsing funds and I thought he was an idiot to try and save the funds. Much like the Feds of “contained” of subprime. Australia, German … more to come. CIBC denied the significant exposure issue but we will see soon. Why would Moody’s accuse CIBC’s exposure for nothing?

  51. Al

    A said, ” why don’t you invest in industries where appreciation is propelled by innovation?”

    A, this is thematic blog where people discuss RE investment . If you are interested to talk about trading stocks and industries or other subjects, just choose another blog.

  52. tqn

    “Another point of contention, I believe it should be about people, families, and a safe, healthy and peaceful place to raise communities.”

    It is not just you who want to believe in what quoted above. I, for once, would be to believe it too. But, it only happened in the SnowWhite’s world.
    Opps, back to reality…Utilitity bills are due tomorrow!

  53. -A-

    tqn:

    down boy, read and learn.
    See how Rob answers it.
    And again, you will see why you will always be poor comapared to him.

  54. Annon

    LOL. Must admit some people do get lucky in RE and it might even make them look very smart. But when you hear them talk, you realize how clueless they are. Sure, for most people, all they can do is to ride with the wave and many might fare quite ok too.

  55. tqn

    A,
    Sorry to disappoint you but I am just fine the way things are; no need to compare to anybody about rich or poor. Two things I know for sure: this is an entertaining blog so no sweat; and many people are alot poorer than Bill Gate.
    How are you doing?

  56. ObserverX

    Rob,

    No comment on my calculations in the Thu thread?

  57. robchipman

    Annon:

    The picture you should get from this blog (at least, the “official” picture), is that the market will change. That is the only certainty. Prices will rise as long as buyers agree to pay higher prices. Prices will fall when sellers agree to accept lower prices. A real estate investor has to find a way to make it pay between those two fires.

    -A-

    You can think that real estate should be about peace, love and harmony, but the fact is that those things cost money and they get traded. You can think that this is a point of contention between the two of us, but it isn’t. Its a point of contention between you and reality.

    If you want safe, healthy places where communities of families can sing Kumbayah, someone has to pay for them. Also, someone has to decide who gets to live in them (because, unfortunately, there is more demand than supply). Right now the market does that. If you don’t like the price of ownership, I can buy and rent to you. If you don’t like the price of rent you can live somewhere else and I can find a new tenant. But, unless you invent a new system, someone, somewhere, is going to have to pay for the safe community and choose who gets the benefits that accrue to the costs. That’s just life.

    I’m not a speculator, btw. I’m a long term holder. If you want to call it speculating to factor in long term capital appreciation, so be it, but that’s not the common definition of speculation. I also do not counsel speculation.

    I do invest in other vehicles, but tell me: who do you think sets prices of housing? Realtors? Speculators? Bad people? Or the very people that you want to see in safe communities raising healthy families? Or the person who sells their house to those people and then uses the money to, oh, retire? Who, exactly, is the real villain? If RE wasn’t monetized, who exactly would supply it? Would it magically appear, or would we all just build our own houses, or would central planning get it all dialled in? (Oops, more questions for you to ignore. Sorry 🙂 )

    Personally, I’d love for everyone to have everything. If I had to pick, I’d probably want to cure child poverty and malnutrition in 3rd world countries before worrying too much about affordability of housing in Vancouver. If I try to rank the wide range of problems we have in the world, local housing affordability comes in pretty low on the list.

    ObserverX:

    Didn’t see it. I’ll go look now.

  58. -A-

    Rob, you almost had me crying. Then I realized it sounded as though you were reciting a Miss Lynn Valley beauty pageant acceptance speech and the crying turned to laughter.

    Sensitive guy you are for sure, not a crusty old cynic like your side kick.

    Tqn, see how it’s done!

    I call him a speculator, he throw back at me how he wishes everyone had everything-rather highly idealistic, yet my idealism separates me from reality.

    “Who, exactly, is the real villain? If RE wasn’t monetized, who exactly would supply it?”
    Rob, I don’t know what gave you the idea I was for central planning, or that homebuilding should not be monetized. That is far from my ideology.
    I just see you as irresponsible in the big picture.

    It’s much like an elephant who contributes greatly in the destruction of the plains by uprooting an entire tree just to get at a tender leaf at the top.

  59. robchipman

    -A-

    What gave me the idea that you are for central planning is your objection to real estate being monetized, comrade.

    And the difference between your idealism and mine is that I realize that my high flown idealism isn’t realistic, and so don’t use it to garner warm and fuzzy credentials. As they say, talk is cheap, but it takes money to buy whiskey and cigarettes.

    The idea that you see me as irresponsible, in the big picture, just like the elephant who contributes greatly to the destruction of the plain, is perfect. You, I assume, can see the big picture. Shoot the elephant to save the plains, because the elephant is the problem. Such clear vision.

    How would you fix the current housing cost problem, (without central planning, of course)?

    Oh oh, another pesky question!

    BTW, where are you going with the coy comments about tqn? Do you know something you’d like to share? (I can’t get away from asking you questions! Answer one and maybe I’ll stop).

  60. -A-

    So if it were not for the speculators,flippers , and your hype machine,the economy would just come to a grind?

    No money for whiskey or cigarettes.

    Would the builders stop paying workers wages?

    Faulty logic.

  61. robchipman

    -A-

    Now you’re really grasping. The idea that my hype machine controls the price of real estate is, well frankly, its flattering.

    Just curious: are builders ok when they’re paying workers wages? How about when they’re say, raising the price of their product to make more profit (as in “evil profit”)?

    You kill me!

    Hey, do you have more questions? Or will you break down and actually answer one, Yoda?

  62. Skeptic

    sheesh…. “Do Not Feed The Trolls”

  63. CC

    Normally, I would agree that trolls are best left unfed. But this is actually an interesting exchange. While (s)he does have an annoying tendency to not answer any questions and take positions that are safely vague, -A-‘s critique does have some legs.

    Rob, you are too intelligent to think that there is no middle ground between unrestrained capitalism and socialism. Labelling -A- as a commie is immature and misleading. People in the RE industry undoubtedly contribute to the rational and irrational aspects of the market. For most in the industry, ever rising prices are preferred and they (perhaps understandably) try to encourage growth. Unfortunately, one of the effects of such growth is that the cost of ownership becomes higher and those on the lower end of the income spectrum suffer accordingly.

    BTW – The difference between Rob’s idealism and -A-‘s idealism is that Rob is not actually idealistic.

  64. robchipman

    CC:

    Capitalism must be restrained. Any thinking person knows that. And a little further thought leads one to the understanding that its not so much that capitalism has to be restrained, but that some other sort of system is required to attain the goals that society agrees are desirable, but which aren’t provided by capitalism. Capitalism has a narrow focus (the profit motive), while the acheivement of some commonly held goals is much more complex.

    In the specific case of real estate, the fact is that there is demand for it and supply of it. The market determines who supplies it and and who is able to consume which parts of it. It does this because the trade is monetized. If we decide that we don’t like the effects of the monetization, we need an alternate system to solve the supply and choice issues. Who gets to live in Kits and raise their family in a safe and peaceful environment at a reasonable and affordable price and who gets to live in, say, “the suburbs”? Right now the market handles that decision. -A- claims to not be a fan of central planning, and so I’m curious what new system he proposes.

    I recognized the shortcomings of capitalism a long time ago, but its benefits are self evident. To simply rail against the perceived ills of the system as if you are the only one to recognize them is immature, and I think that’s partly -A- is doing.

    -A-‘s other idealism, the idea that real estate should be about people, families and safe peaceful places to raise communities (whatever that last part means), is a smokescreen. We have safe peaceful places to raise families, by and large, and they were created in part by a monetized real estate system. We have communities, and again, they were created, in part, by a monetized real estate system. Builders don’t build, carpenters don’t nail, electricians don’t pull wire, lawyers don’t transfer title, and municipalities don’t deliver services without being paid. Many people are in it partly for love, but just about everyone does it for the money as well. take the money and the profit motive away and I can’t see how it will work.

    Want more rental housing? How about tax breaks. Sorry, that’s central planning. That’s the government picking winners and losers. I’m not the one against that, remember. -A-‘s the one who said he’s not a fan of central planning.

    Want cheaper properties for homeowners? Give them tax breaks. Wait, the homeowner’s grant is a sop to wealthy elderly people when young working people need the money more (see this week’s Georgia Straight to confirm that line of thought). Make principal residence mortgage interest tax deductible (wait, that will lead to more interest only loans, higher prices and tax subsidized home ownership).

    In other words, the problem is complex. Dismissing simplistic complaints for what they are (not solutions, but self serving tears designed to ehance your warm and fuzzy street cred) isn’t cyncism. Its recognition that the problem is complex.

    In terms of whether rising prices are preferred by most people in the RE industry, perhaps you’re right. However, most sales people in the industry today won’t be in it in 2 years. The fact is (and this has been true as long as I’ve been around real estate) most Realtors are on their way out from the day that they’re licensed. They won’t experience different markets. They may think rising prices are good for them, but in fact they don’t know whether its true (and its not, really) and they don’t influence it anyway. Rising asset prices are influenced much more by cheap money and increased affordability than they are by salepeople.

    Maybe I’m not idealistic. Maybe -A- is. That’s great. I prefer to do something about things that I can rather than complain about something I can’t control. We all make real estate prices go higher, whether we’re sellers, buyers, agents or tenants. I can’t make sellers take less than their competition. I can’t make buyers pay less than their competition. I can’t lower rents and tell the bank that the mortgage payment hasn’t been made because I’m trying to create a safe environment for something. It won’t work.

    The question for -A- remains: how do you address the perceived affordability problem in Lower Mainland housing without some sort of central planning? Have you examined the potential unintended consequences? If you have an answer, can you share it?

  65. CC

    Rob,

    I agree with much that you have said. For example, at this point it is difficult to envision an alternative to monetization. But that isn’t what I understood the debate was.

    I understood the debate to be to what extent we (government) should attempt to ensure the real estate market serves peoples’ needs across the income spectrum. Unlike -A- (or what you take to be -A-‘s position), I have no qualms about what you call “central planning”. The real estate market is an artificial “planned” creation as are property rights themselves. So, the dichotomy between the free market and central planning is false. The question, assuming monetization, is what kind of market we (as a society) want.

    As for solutions, you are correct that they are difficult. Stipulations regarding non-market housing in new development is a start. Increasing density is another. More aggressive taxation of the profits from real estate has potential.

    Your comments regaring those in the real estate industry are interesting and appear to conflict with your past arguments regarding the value of real estate agents. As for the comment about the effects of real estate boosterism, I don’t agree but I doubt you or I can prove what influences asset prices (particularly in a clearly emotional market as we have been in recently).

  66. robchipman

    CC:

    Of course we agree on a lot. We’re looking at the obvious. Here’s the rub: its the definition of the “we” that you use when referring to “what we want”, and all the permutations of that definition.

    What are “people’s needs”? What are the needs, and who are the people?

    It seems obvious, but let’s examine the need. Is it shelter, or is it ownership? Or is price?

    The idea of who the people, or who “we” are is even more deceptive. If the owners and sellers were all large, evil, tobacco selling American multi-nationals with horns, it would be easy to demonize them. Unfortunately, they’re you and me, by and large.

    Saying that the real estate market is an artificial construction is fair. Taking that to the level of saying its planned? I wouldn’t accept that there is much planning involved, really, not on a market level. Zoning, OCPs, mortgage policies – they don’t have a direct correlation to price levels or volume. And like any part of the economy, if it can be planned and controlled, why doesn’t the government get rid of economic downturns across the board? (Quite simply, nobody has that kind of control over the economy).

    Non-market housing is a mis-nomer. Its really housing that is paid for by someone other than the end user for other than personal shelter reasons. It is, in fact, just as monetized as any other housing. If you and I put in a new tower by Citygate, and the city requires “social” housing, who pays? You and I? Or the other buyers? Or the taxpayer? Who picks up the property tax burden for the sewers, roads and transit the end users of “non-market” housing use? Other taxpayers. I’m not saying its wrong. I am saying that we shouldn’t fool ourselves into thinking we’ve escaped the capitalist system simply because we’ve shifted the costs from one party to another. All we’ve done is decide that one person is more deserving than another.

    Density is increasing in the Lower Mainland all the time. It is still subject to market constraints. Density tends to result in more affordability, in terms of lower prices, but it also translates into paying more for less and maximizing the income generated by location. Want to buy a 550 sq. ft. Yaletown condo? Dense, efficient, great location. Same price as a house in Maple Ridge, mind you.

    Taxing of profits from real estate has unintended consequences, and probably negative ones overall. There will be less development, and less supply, because if profit margin drops, capital goes elsewhere. Government can’t fill the void. That’s not me being anti-government; I’m just observing that they’ve never been able to effectively solve the problem, anywhere, ever.

    Last, before I go, a good Realtor is worth everything you pay him. Get a good one. Bad ones can cost you money. It has nothing to do with time in the business.

  67. CC

    Rob,

    “We” are individuals who live in this community. The community can be defined at various levels. Democratically, “we” exist and act collectively through our government at the national, provincial and municipal level.

    The definition of human needs (as opposed to wants) is not as complicated as you make out. Affordable shelter is a good start. Ownership is a want.

    Nobody is trying to demonize the average purchaser or vendor. Such people are merely trying to make their way in the world. That doesn’t mean that, acting collectively, individuals can’t cause harm. Global warming and other environmental problems are good examples. The question is how can we, as government, influence, we, as individuals to act less harmfully.

    The real estate market is “planned” or deliberate in the sense that we, collectively, have chosen to give it certain characteristics and not others. The decision to tax or not tax certain capital gains (or to allow mortgage interest to be written off), for example, is a decision no matter whether such a decision is affirmative or negative.

    Saying government doesn’t have perfect control, which is obvious, is not an argument that government shouldn’t try to influence. Of course, one must be wary of unintended consequences. What are the unintended consequences of failing to meaningfully address the affordability of housing in Vancouver to date?

    As for your critiques of the suggested measures, I don’t find them persuasive. Yes, we all have to pay for social housing. I don’t have an issue with monetization or a redistributive system. We aren’t deciding who is “more deserving” but rather who has “need”.

    Unlike you, I don’t fear the collapse of development due to the taxation of profits from real estate. People were building a lot of houses a few years ago when houses were worth half as much (and the potential for profit was correspondingly lower). At this point, people in the building industry are making obscene money across the board (who bought the Canucks? who is trying to get control of them in a lawsuit?). At this point, we clearly need less incentives to build, not more. Houses will still get built as long as there is some profit. Government doesn’t need to fill the void.

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