There were 190 listings today, and 138 sales, for a sell/list of 72.63%. Inventory was 11,806 (when, oh when will it hit 13,000? 🙂 ) and over 90s were 2,833, or 23.99% (that number is certainly trending up).
Wednesday there were 251 new listings and 169 sales for a sell/list of 67.33%.
Tuesday there were 257 new listings and 145 sales for a sell/list of 56.42%.
The Best Real Estate Anywhere! 
Rob, what’s going on? Why is inventory not growing as sell/list ratios are down for weeks?
Thanks for the number Rob!
Ya, i’m surprised by the lack of inventory uptick, but ‘when oh when’ – I say 13,000 by late November….12,000 this month, then a fall off at month end, and a steady trend up…i heard on the radio (980am) this morning talk about the US housing issue and how it will impact us economically – finally, a straight fwd comment from a newscaster…i do think the psychology is very very gradually shifting…
I’m just waiting to see if, and how, Snick will play nice.
Ok..US fed will cut 1/4 % next week, given the ongoing subprime, etc. If Dodge doesn’t react, and he’s not flinching yet except to tell retailors to lower their prices, dollar is heading for 1.1 plus.
Attention our American friends: BUY IN VANCOUVER NOW!
Funny how real estate could be a day trading activity.
Thought this was an interesting anecdote about how fast things can change, particularly in a market area which was held up until recently as one that was bucking a trend…
The San Francisco Chronicle reports from California. “Sales of existing homes in the Bay Area and California plummeted in September and prices sank, a state real estate trade group reported Wednesday. In the Bay Area, sales of existing, stand-alone homes plunged 45.6 percent between September 2006 and September 2007, while the median sales price slid 5 percent to $702,240. September’s median was a whopping 17.7 percent below May’s peak of $853,910.”
“‘We see a sea change almost overnight in the Bay Area,’ said Robert Kleinhenz, economist with the California Association of Realtors.”
“Analysts said the current downturn is already more severe than the housing slump of the 1990s, and they predicted that before it is resolved it will rival the 1980-82 slump.”
surprised to learn that SF’s home price is at the same level as Vancouver. The wage level is much higher in SF than Van… at least in the Hitech sector.
Domus:
The best I can do is guess that listings are expiring and sellers are leaving the market. Today there were 52 new listings added, but as close as I can tell there were also 25 expiries, which reduces the gain to 27. Its a long climb to 13,000 at a net increase of 25 per day.
what is more shocking is that average homes sell for $700k anywhere on the planet.
So, any foreigners (like Americans) who bought Canadian real estate during the last 5 years, but need to sell, will see a definite loss in the currency exchange.
If RE prices drop here in Canada, along with our high dollar, I guess lots of ‘outsiders’ will be very unhappy!
sourgrapes, the exchange works the other way.
Canadian dollar hits a high of $1.04
Oil hits a high of $92.22
Countrywide Swings to Steep Loss
http://tinyurl.com/2x97nw
Any Americans who bought here 5 years ago are looking pretty smart at the moment. As well as avoiding the US sub-prime mess, they’ve most likely doubled their money (plus any leverage) on the property and now they’re making huge gains on the dollar.
Lumber futures continue to fall to new lows for various BC wood types adding more woes to our forest industry.
I noticed your on the Canadian RE Alliance on the TOREAL blog as he just added me. I added you to my site, could you please link me back as “Sarnia Real Estate” Thanks!
coco, exactly, I am waiting for forestry to be blamed for what I am guessing will be downward revisions to BC GDP, unless some other industry picks up the slack … that’s a lot of slack to pick up though.
(Sorry for the incomplete post above, Rob could you delete please?)
WoW said:
“…i do think the psychology is very very gradually shifting…”
Psychology may me shifting but the CMHC is playing hardball with the new zero down specuvestor mortgage insurance. And with huge line ups for MW condos I think this bull has a long way to go yet.
Danza, I also think this downturn is going to be a long process until we hit rock bottom. It’s too bad people think the Vancouver market is invincible. Even in this day and age where information is readily available (more so than it’s ever been) people make poor choices and run into financial hardship and ruin.
Beware the Bear!
“people make poor choices ”
still yet to be proven whom make poorer choices! We dont need to conclude that soon.
“Any Americans who bought here 5 years ago are looking pretty smart at the moment.”
Whether stocks, beanie babies, houses, etc. you only profit if you sell at the right time.
No one every made money “buying” a house.
tqn said:
“still yet to be proven whom make poorer choices! We dont need to conclude that soon.”
I got tired of the traffic due to the construction around Queensborough bridge, hours in line-ups and idling away hundreds of dollars in gas so I went and bought myself a scooter. A brand new Aprilia, italian made fast and cool. Cut my commute time three-fold and my gas expenses five times. I’m not even gonna telly how much more enviromentally responsible this is. And it’s so much fun. I paid just about $4,000 for it. Cash.
I pay cash for all my impulse buys.
Guys at work shake their heads, wondering how I can afford all these toys, while they’re trying to come up with creative ways of serving Kraft Dinner every day of the week.
Did I mention that I’m the one without the mortgage?
I think I made a great choice.
Ymir, I bet you’re saving too. Maybe even more than what you would be putting on the principle if you had a mortgage. Yep, I know the lifestyle well and it is the only way to live right now in Vancouver.
Ymir:
Did I mention that I have multiple mortgages, don’t eat Kraft dinner and don’t lack for discretionary cash?
I’m not implying you made the wrong choice – I’m just questioning the scientific method 🙂
(Now, if you want to compare fun purchases, you can have your scooter. I’m thinking about buying a mini excavator and digging myself some holes!)
RE: American buyers. Several of my American Coal Harbour clients bought with currency hedging as a specific goal. Some have since sold (although generally for non-financial reasons – they would also have held).
They mentioned the currency hedge angle at the time and I was somewhat surprised.
In the fullness of time they’ve been proven correct. I can’t have the market cornered on these guys, so I’d suspect that they aren’t as rare as some suppose. 20% rise in currency + property value appreciation + plus the effects of leverage? There is no question that they made out like bandits.
Rob,
But you also happen to be a realtor.
I’m just an ordinary guy working an ordinary job earning an ordinary engineering salary.
Even though it took a lot of time and effort and motivation to get where I am right now.
Don’t forget we all go through thick and thin, you guys are riding the wave right now and own the world… but all the ordinary guys who got mortgages are unfortunately leaving a Kraft Dinner reality instead of hi-life dream reserved for the winners of this world you are promoting…
At least all the ordinary mortgage owners I know that is.
Note that I said Mortgage-Owners, not Home-Owners.
Ymir,
Congratulation on your lifestyle choice. We each give up something to gain something else, whether it’s impulsive or not. If you are comfortable with your choices, who to say you are right or wrong.
“but all the ordinary guys who got mortgages are unfortunately leaving a Kraft Dinner reality instead of hi-life dream reserved for the winners of this world you are promoting…”
It’s funny that you assumed the ordinary guys who got mortgages have to eating KD. Have you actually see how they live? Some people are mouth-watering to have a mortgages instead of plunging a chunk of cash into a fancy piece of toy that the pleasure lasts a few days. I am not sure who the winners here are, only time will tell; but the losers are sure the one that do not know how to proper planning.
“I went and bought myself a scooter. A brand new Aprilia, italian made fast and cool.’
You must be proud to ride such a unit.
“Cut my commute time three-fold”
How does a scooter cut down commute time? Do you drive down the side walk?
“I’m not even gonna tell how much more environmentally responsible this is.”
If it is a 2 stroke engine, which most scooters are, it puts more pollution into the air than any car.
“Guys at work shake their heads, wondering how I can afford all these toys”
Ya I am sure that is why they are shaking their head when they see you riding the scooter.
“while they’re trying to come up with creative ways of serving Kraft Dinner every day of the week.
Did I mention that I’m the one without the mortgage? I think I made a great choice.”
Could be. I guess it depends if you would prefer to eat KD now and retire comfortably mortgage and rent free or retire eating KD still paying rent.
“Even in this day and age where information is readily available (more so than it’s ever been) people make poor choices and run into financial hardship and ruin.”
Yup, for example all the people who thought the real estate market was crashing 2 or 3 years ago.
News Flash, I didn’t think I’d have to add to my comment because is was meant to point at all financial decision making areas. Unfortunately you could only see fit to add a criticism.
RE now or 3 years ago and affordability is all relative to the the buyer’s means. If 60%+ of your net household income goes to your home then you’re likely being stretched. That applies now and 3 + yrs. ago. The net allows people to see the market is unrealistic and out of whack but they still buy into it. We can can now get a decent global picture of the RE markets. We see bubbles burst all around us…the US went pop and many ignored it. Parts of Canada went pop but the West was still going strong so many in Vancouver just ignored it. Now Alberta is well into their downturn and many here could care less because we’re ‘invincible’. There are various credit crunches…throw in a weak US $ and imagine adding an increase to the mortgage rates. Sounds like a recipe for disaster for those who have strethched themselves. Ah well…I prefer safe over sorry when you’re talking about my home and financial well being.
Caution: Bear Crossing 🙂
I think Snick is the one who has it all figured out. Not you, Rob. Not by a long shot.
News Flash
Only 1 big (and I mean enormous, drive a truck through sized) hole in your argument.
It costs MORE to own than to rent. If you buy now or bought in the last few years the interest on your mortgage payments will be greater than the cost of rent. If the renter just put aside some cash in the mattress they’d be further ahead, if they invest they’d be way farther ahead come retirement time. And that’s IF (and this is a colossal if, much bigger than your hole) the market can maintain these prices indefinitely.
Necessity is the mother of invention
Basic necessity of life is Home,Cloths,and Foods.
Bears are not just bear they are ######people who are involved in making of fake bubble.They have SOLD off their option to some one else at the rate of $ZERO.
Opportunity that was available for us for Vancouverites on the first place,Someone else picked up those units because bears were too lazzy to pile up the lines and too aggresive to pile up on bubble blogs.Richi rich from other provinces and countries can buy property in Vancouver that worth millions of dollars.
these people did not buy that for 300k in 2005,400k in 2006,and 500k in 2007.
SaPtv, thanks for that amazing insight. You are one brilliant human. You should charge us for being privy to your wisdom.
If money makes you happy and you didn’t buy a few years ago then you would be a bit cranky right now. Money is not my concern. I would like to be able to move around the Lowermainland and do it for a reasonable price. I am not here to accumulate mass wealth. Money does not make one happy but if it makes you happy so be it. I like branching into various areas etc. I like to live life. This blog is full of people that are looking for easy money and that is sad. Go earn your money and make a difference in society. Rob, I am starting my next chorus of Kumbayah and dedicating it to you! 🙂
Bloody hell Satv is on this forum too??!!?! There goes the posting…
Satv is a real estate blog virus I think! 🙂
Bull = someone who bought in the last 10 years.
Bear = someone who wished he would have bought and is now pissed. (and likes to tell everyone he is smarter for renting or waiting)
“(and likes to tell everyone he is smarter for renting or waiting)”
LOL exactally…
I use bears to clean my condos 🙂
Ymir:
Check out WorkFutures BC (http://www.workfutures.bc.ca/article.cfm?article=home&lang=en&site=graphic)
Engineers (train engineers and the other kind) both make more, on average, than Realtors 🙂
Anonymous:
may I humbly point out that there is a gigantic difference between someone who bought 10 years ago and someone who bought 2 years ago?
I think it is mistaken to put them in the same category. I am still convinced that many who bought two years ago will regret it, also in Vancouver.
I believe the adjustment downwards in real terms will be long, substantial and brutal on many speculators/ftb’s.
Domus:
Am I wrong or does your forecast require a limitation on liquidity? The reason I ask is that I think increased liquidity (the theme of the decade) has contributed greatly to hard asset appreciation. Challenges have repeatedly been solved by increasing liquidity. The most recent challenge has evoked the same response.
I know that we always comment “better to take the bad medicine now than to put it off by increasing the money supply”, but when and how do you see that happening?
I don’t mind bulls but SATV is down right up the @SS with his comments.
Markets are cyclical buddy.
My wife and I saved up $28k in 6 months while our savings interest more than pays our rent.
Domus:
I bought 8 years ago, 4 years ago and 2 years ago.
best thing i ever did.
I think we are in a ho hum next few years, during this time my rents will cover my mortgage + all costs.
i don’t know when the next upturn will be, so i’m not going to sit around a wait.
no one can predict downturns, or upturns for that matter.
fwiw, my opinion
until we see some headlines about inventory piling up and prices weakening, this mass psychology will not be terribly impacted – any predictions on when this might happen? I’m talking top headline in the Vancouver Sun, and persistent as a storyline…any guesses on if/when and how it plays out?
“…any guesses on if/when and how it plays out?”
I would expect 1 year from now. Watched pot never boils, mind you.
WoW
By the time the Vancouver Sun or others of their ilk report such figures as feature articles, a reversal of RE fortune will be many months after the fact.
Take for example the Bay Area, often touted by bulls as a very high priced market bucking the decline trend in other US markets. Just yesterday the SF Chronicle reported that median prices were down 17.7% from May of 2006. That’s a precipitous drop, well beyond the order of magnitude that would cause many to panic in this market. That level of drop, however, would have to had occurred over several months. During most of those months of steady decline and building inventories, however, most of what you read in the about RE in the SF Chronicle was cheery – along the lines of “we aren’t experiencing the same downturn as other markets; bubble, what bubble?” (a la our own Helmut Pastrick and his waltzing optimist colleagues).
Bears in this market will have to endure the scorn of bulls until long after the bears are factually vindicated. That said, with Alberta in a downturn, Seattle just joining the party and now the Bay Area in significant decline, the bulls have run out of cities to point to which are analogous to their “Vancouver is different theory”.
The only thing different about Vancouver is that apparently it will be one of the last, if not the last, market to drop (I now understand better why Robert Shiller singled out Vancouver as the most “bubbly” market in the Continent). Don’t look for a front page headline as we fall off the cliff, though. Look for it while we’re in mid-air, half way to valley floor.
I don’t think anyone should crow too too loudly about their gains during a massive bull run on pretty much all assets. If you have been bullish on anything at all you’ve been massively rewarded over the last five years. We’ve had massive asset inflation: Stocks, RE, Gold, Commodities. If I have done well, should I consider myself lucky or smart? How long can this continue, and which of these assets will continue to appreciate?
Haha, if bears can afford $4k scooters for cash, it tells me two things:
1. not as much money is being saved and going into bear GIC’s as what we’re being told.
2. There’s still room for rent rises in Vancouver.
“Haha, if bears can afford $4k scooters for cash” Don’t go there! Skeptic! you don’t know the fear I felt when I was followed by a group of scooters wearing their colors!
“if bears can afford $4k scooters for cash, it tells me two things:
“2. There’s still room for rent rises in Vancouver.”
You wouldn’t want your tenants to have any fun would you. Raise the rent so high they resent you, always good public relations for a landlords. (especially for ones that double up as real estate agents)
“There’s still room for rent rises in Vancouver.”
That is true in general regardless of the situation. It may not always be true that landlords hold the ultimate power over rent increases.
Re: rent rises in Vancouver. No, this is not the only city to live in. We already have a huge labour shortage for service jobs because people don’t move here like they used to.
Rents are now roughly the same as Toronto, where incomes are slightly higher. The rent increases are over for a while unless we have big wage increases, particularly in service jobs.
Rob
“Am I wrong or does your forecast require a limitation on liquidity? The reason I ask is that I think increased liquidity (the theme of the decade) has contributed greatly to hard asset appreciation. Challenges have repeatedly been solved by increasing liquidity. The most recent challenge has evoked the same response.”
Of course there’s a limitation on liquidity, are you suggesting that money supply is infinite?
Right now the market is riding on fictional money. Let me put it this way:
If 5% of houses in city V sell at 20% more than the last year’s price ALL of the housing is adjusted upwards increasing the theoretical equity in city V by 4 times the actual amount of the housing sold. That equity can be used to leverage the purchase of MORE properties and endlessly onwards right?
Well it’s all OK until the banks start cutting people off, which began a few months ago here. You tell me, what happens to the cycle when it stops going up? People who were refinancing every few years because they couldn’t make payments otherwise suddenly find that the banks won’t LET them borrow any more. People who want to buy are cut off.
The CMHC is doing it’s best to keep the cycle going forever (I think it’s a plan by the current Govt. to not let the crap hit the fan until after the next election) with their 0% down on multiple properties insurance but even they can’t keep things going infinitely.
The appreciation of Real Estate MUST end, it is mathematically impossible for it to appreciate forever, for those who don’t understand why you need to re-visit grade school, it’s not complicated. Once it reaches the end of appreciation it MUST collapse. This is another mathematical/social imperative, more complicated than the impossibility of infinite appreciation so I’m happy to explain if anyone is lost.
Just an addition to the last comment of mine.
Residential Real Estate in Greater Vancouver is currently worth the GDP of Canada.
How much more money IS there to put at risk?
“. ……..Once it reaches the end of appreciation it MUST collapse. ”
Please explain, as promised. Thanks
I am an homeowner (not home debtor) in Vancouver.
I’m thinking it may be a good time to cash out in Vancouver and move to buy a much cheaper home somewhere else such as Ottawa or Toronto.
What’s so special about Vancouver?
What’s so special about Vancouver?
1.Your comment is so special about Vancouver.
2.You Say”I’m thinking it may be a good time to cash out in Vancouver and move to buy a much cheaper home somewhere else such as Ottawa or Toronto.
But you can not switch from any where else to Vancouver in similar situation.Only Vancouveites can do that.That’s so special about Vancouver.
They can lower rates all they want. The inflation genie is back out of the bottle. Any increase in liquidity will make long term rates go up (look at the US post Fed cut). Nothing will make pricing correct more surely than rising rates.
If the US continues to cut overnight rates, we will see mortgage rates back over 10% before our fabulous olympics.
Soulman:
There are several factors at play but I think the biggest on is that a fair percentage of properties in Vancouver are “investment” properties with a negative cash flow. In this kind of “investment” the landlord is counting on appreciation or he’s losing money every month. If the appreciation stops, these people will sell. Add in all the people who have to sell for other reasons (moving, death etc.)
Many of the buyers are only “buying in” because they believe the property will continue to appreciate, making their sacrifice to pay the onerous payments worthwhile. If there’s no appreciation these buyers will dry up. Include investment buyers who can no longer figure out a way to make a profit and you have a fair chunk of the buyer market cut out.
So, on the supply side we have many big pluses in a non-appreciating market and on the demand side we have a reduction in the number of buyers.
You don’t need to have an economics degree to be able to tell what happens next. Same as in the states, big homebuilders start offering discounts. New home sales numbers are stable for a while while existing home sales plummet, the investors, smelling what’s on the wind slash prices to get out with their shirts. Last in line are the regular homeowners who foolishly hold their high prices while the market collapses around them.
There are many different markers that show Vancouver housing prices are at an unsustainable level. The ONLY thing keeping the market going right now is the appreciation and the perception that appreciation will continue for the foreseeable future.
Right now – are prices moving UP (MoM) or flat, or, like Alberta, actually moving downward? Any thoughts (effectively, is the market tightening, tight, or starting to loosen?) – guess I’m looking, partially, at the inventory #s for clues….hoping to see 13000 this year and 15000 in the spring! With inventory at 6 months sales….any thoughts/expectations?
Thanks anon, Gotcha!
‘They’ say it is possible to calculate the value of a house, based on the rent it brings in.
I pay $20k annually in rent. That means the home is worth , (according to the ‘multiply rent by 150 times’ )about $300k. Right?
Well, so happens the house’s value is closer to $700k! Lunacy….
So, is it REALLY true that either house prices have to fall back within the normal range of rental value calculation?
Or, should I be paying closer to $48k annually , for the pleasure of renting a musty, mouldy old home that happens to be in a good neighbourhood?
How many folks can even afford $4k monthly? If they can, WHY would they live in this dump??
So, something’s gotta give. You are right. Incomes are certainly NOT expected to double or triple the way RE prices have.
My landlord paid under $300k , 8 years ago.
The income then was about 7% ROE.
When do you think we’ll see a nice big discount/clearance sale on houses? Been saying so for 3 years, while it kept going up.
I never used to call a specific time. But now, after being called “Chicken Little” by my kids early in 2007, I called it for this autumn. Time will tell. Then we can wipe the smirks off the faces of those who call themselves ‘investors’, who keep building castles in the air, while counting their paper profits.
Indeedy, those will be the ones who will be sorry they didn’t cash out in time
“I know that we always comment “better to take the bad medicine now than to put it off by increasing the money supply”, but when and how do you see that happening?”
Rob, I wish I could answer. I do not have a crystal ball. What I can say is:
1) US market is going down fast both in volume AND prices: this is despite any intervention by Bernanke.
2) UK has flattened and there are rumours of large discounts on the higher end of the market in London (prime RE). Here as well we have witnessed large injections of liquidity during the summer.
3) Spain is down the drain. Stocks are not moving and buildres are slashing prices.
4) Ireland has falling prices in prime areas of Dublin, which have experienced appreciation for the past 10 years. The decreases are becoming larger.
5) Even Denmark, often called the RE paradise of speculators for its crazy prices (higher than London or NY) is going down.
Bottom line is: this seems to be a global bubble, and the burst will be global as well. If you could give me reasons why Vancouver should not follow, I’d be happy to listen.
Just few more points:
– mortgages rates are on the up (they are priced with long-term bonds, which adjust to inflation expectations). Central banks cannot change the returns on the long-term bonds. In fact, if anything, by releasing more liquidity they can push up those returns (and mortgages) as they inreoduce inflation fears;
– population growth (and we discussed this at lenght) has been stagnating in Vancouver Metro (according to the Sauder School centre for Urban economics);
– strong CAD $ means a harder hurdle for new investors from abroad (China, US, Europe);
– large stock of new builds is coming online, and should hit the market in the next 18 months. Just some arithmetics here: Vancouver Metro grows by roughly 11k new “households” every year. The next 3 years will see an average of 19k new units coming online in each year (according to Pacific Metropolis and Tuarog).
Basically, if I do the math, I cannot find one reason to suggest an RE purchase in Vancouver.
I have been surprised by the strenght of this market before: I could be wrong again, sure.
But here is my two cents……
JohnnyV said:
“LOL exactally…
I use bears to clean my condos”
You sir make bulls look like idiots.
Please do share some more of your wisdom.
Any more questions about who’s smarter ? Anyone?
Domus… great post!
Domus… great post!
lol is a great,
Worldwide Currency is up compare to USA.So they have nothing to loose while coming to Canada
He says”But here is my two cents……
Oh please keep the change.
Domus… great post!
lol is a great,
Worldwide Currency is up compare to USA.So they have nothing to loose while coming to Canada.
He says”But here is my two cents……
Oh please keep the change.
SATV,
WHEN OFFERING THE CHANGE…STFU.
$fromA$ia
October 26th, 2007 at 5:44 pm
Markets are cyclical buddy.
If that is true my grand father should be back.
there are hundred dollars in hundred dollars bill.
Canada line is underway and that empty space we have seen prior to ,that will never exist once the track took place.
A “basket” of goods and
services that cost$100.00 in 1914
that cost now: $1,861.67 in 2007
Per cent change: %1,761.67
Number of Years:93
Average Annual Rate of Inflation/ % 3.19
Decline in the Value of Money:
CPI for first year(Aug 1914) 6.0
CPI for second year:(Oct 2007) 111.7
Do you beleive this cycle will be repeat
Then you say”My wife and I saved up $28k in 6 months while our savings interest more than pays our rent.
that is a evidence for your participation for bubble otherwise you were and you are in affordable situation,but you want the market to collapse.Why is that???…..
satv… do you have any friends that want to buy some downtown condos?… all the Realtors that I’m talking with can’t sell their listings. I have 5 listings right now and can’t move any of them. Open houses are not being attended by anyone serious and those who do come are asking why the prices are so high and when I expect the market to fall.
I believe buyers are on hold and going to wait out the market. They are looking for at least a 20% correction by next spring and another 20% by the fall.
I personally think this is too optimistic as prices take a long time to fall, generally 1-2% per month.
Jeff,
you are for sure in cycle for Oct when your listing does not proceed but later those get through.Remember last year same time “freesea”Do you want me to copy and paste that here from vancouvercondo.info.
I can help you little bit to find buyer those are here with-$fromA$ia. He and his lots of friends here in same boat are in affordable situation, unless they are here to read your comments they can’t be there to buy your units.So its up to you know how you want to decide your fate.
jeff
thanx for the in-the-trenches anecdotal info..
looking forward to more of the same or even greater depth and detail…..
SATV= ROB???
SATV,
Your brother’s your Dad’s mom. You don’t make any sence.
Soulman
“I pay $20k annually in rent. That means the home is worth , (according to the ‘multiply rent by 150 times’ )about $300k. Right?”
Well, exactly $250k actually.
“When do you think we’ll see a nice big discount/clearance sale on houses? Been saying so for 3 years, while it kept going up.”
I don’t think there will ever be a good “clearance sale”, best the dip tends to hit after a big bubble is a 10% drop below the normal curve.
I cannot tell you when. If anyone tells you they can pinpoint these things they’re lying.
My gut feeling is that we’ll see things begin to seriously start sliding towards the middle/end of next year but it could be a bit earlier.
>>The ONLY thing keeping the market going right now is the appreciation and the perception that appreciation will continue for the foreseeable future.<<
One thing you forgot on your list–that global money will keep migrating to Vancouver.
Canada and Vancouver have a couple things going. The Olympics. No wars going on. Decent climate. Excellent quality of life. Lax immigration policies. As long as this keeps up, the world’s wealthy will keep migrating to Vancouver and bringing lots of $ with them.
This won’t keep the markets going forever, obviously, but I suspect that these are the reasons why Vancouver’s bubble is still inflating when others are all hissing.
It will be fun to see how this plays out when the bubble is half-hissed. Market compression is big in bubbles, means that the least desirable properties are priced relatively high. So, if the 19K/yr homes built vs. 11K/yr households formed plays out, the lower end of the market (assuming most of these are not luxury homes/condos) will drop most willingly. All those builders aren’t going to sit around and wait for prices to drop more, they’ll just slash them as low as necessary to sell, dragging the market down with it.
I suppose, ultimately, it’s a matter of how much $ is available to Vancouverites to actually pay these high mortgages after the perception of eternal appreciation is shattered. Which sectors are most overpriced relative to the assets/income of the folks paying the mortgage?
WBWUCR?
When I really want to get outraged, I look what they are charging for leaky condos in East Van and New West. Yeah, the lower end is going to get smashed once the market weakens.
Jeff
Your comment about being unable to sell any of your five downtown condo listings seems like a rather large fly in the proverbial ointment (lineups to buy Millenium Water etc.). You also commented that RE agents you’ve been speaking with are also having trouble selling their units.
Although the Vancouver Sun has always featured a lot of RE advertising, I’ve noticed of late that there is significantly more.
From your perspective has something happened to the market in the last few months?
Jeff
“I personally think this is too optimistic as prices take a long time to fall, generally 1-2% per month.”
Umm have you been paying attention to markets where the bubble is already deflating? Miami? Have you LOOKED at the graphs of the ’80s bubble burst?
20% over two quarters is NOT optimistic once things start to go, but I think the expectation that the bubble will burst this fall/winter might be overly optimistic.
Johnnyrent… speak to any honest Realtor… including Rob… and they will tell you the number of buyers is down significantly. Prices and inventory are slightly higher, but the number of buyers is down.
Therefore, most of you are hoping for inventory to rise… well it doesn’t really need to because the number of buyers wanting to buy the inventory is much less.
Whenever it slows down Realtors will place ads to generate business. One of my Realtor buddies who has been in the business 20 years told me he placed a newspaper ad this week and hasn’t had the need to place any in the past 4 years. Ads are placed to find buyers to work with and he currently needs clients… this has not been the case for him for the past 4 years… wow!!!
WTH???
YOU SAID:” Anonymous
October 27th, 2007 at 10:23 pm
Soulman
“I pay $20k annually in rent. That means the home is worth , (according to the ‘multiply rent by 150 times’ )about $300k. Right?”
Well, exactly $250k actually.”
I thought you were a mathematician! 20 by 150 IS $300k. say it ain’t so!!!
Well,
Just heard from a realtor friend that 2 different sellers who refused good offers on their homes , just accepted LOWER offers because the houses just sat there after the first, higher (and early) offers were refused.
The sellers had thought they would get more moula if they waited a bit. Is this an indication of the coming change?
Jeff, thanks for your anecdotes. When hubby & I are looking to buy once this market drops a bunch, we will give you a call!
http://seattlebubble.com/blog/2007/05/
I found reading this page from May in Seattle fairly enlightening.
Soulman: it’s 150x the *monthly* rent, which works out to $250K.
from craigslist:
I have been in Vancouver real estate 30 years. I remember when people said “what! pay $400K for a house in Kits – never! I’ll wait for the prices to drop.” That guy is still waiting…
Did the Fraser Institute really say that values are 15-30% Overvalued?!? Where did it say that? Based on what?
You should be scared if you are from California … but here in Canada, and in BC particularly, we are not fighting a ruinous and fictitious “war on terror” to enrich our cronies in the war industry… and the fundamentals are impeccable. Has the market slowed? Yes it has, and so it has over the many annual cycles. We have had a great runup … time for a breather. What else is new? There is no “bubble” except for “speculators”. Investors, on the other hand, know when to hold em.
http://tinyurl.com/yrb86k
just talked to a local realtor. he did not sell anything yesterday – market is really slow down!
On the other hand, three bungalow home listings around my place since Sept, asking $559k, $599k and $669k all has their sold stickers on this week.
As far as timing for the big drops, I’m expecting the major shift in the market to come in late 2008 through 2009, largely due to local factors:
-2010 infrastructure projects will be completing in 2008 and 2009. This means local construction layoffs, as the provincial government shifts infrastructure construction money elsewhere in the province, for projects that were deferred until after the 2010 construction was complete. In 2008, speculators will start realizing what’s going to come as the first few major projects finish their construction.
-Residential overconstruction will be coming into play; developers will be having trouble with pre-sales, and speculators who are getting nervous over 2010 layoffs won’t be buying.
-Similarly, as soon as inventory rises significantly here, or as soon as price growth stops, the image that Vancouver is immune to any housing problems will be shattered…
-Residential projects will be completing at a much faster rate, now that 2010 construction workers will be available for residential projects.
-The sagging (or recessionary) US economy will drag down growth in China, reducing their infrastructure construction and output, which will drag commodities off their current peaks, and cause troubles for companies that export to the US.
-The icing on the cake, which I hadn’t expected, will come in the form of greater difficulties exporting to the US due to the high Canadian dollar. Any company established since about 1994 is taking roughly a 40% hit on the exchange rate.
Hmmm… That came out wrong– I don’t want to see people laid off and out of work, but I am now expecting that to happen, and I think it’s going to hurt the speculators. I don’t particularly care what happens to the speculators, as I believe they’re largely responsible for the prices getting as far out of whack as they are.
As an aside, from the way the CAD has been strengthening for the last few years, I expect “soon” that the CAD will start weakening, with a 5-10 cent pullback, before the CAD picks up momentum and strengthens again, strengthening to new highs.
A bit disappointed to see that no one posted here all day… I just got in from an open house and I need my fix of US foreclosures, cancellations, price and sales declines, etc… I love the links that a few of you are providing.
On the downside, I need to get some sales in the next few weeks because the market completely slows down after mid-November. I am now counting on selling nothing and therefore any sales in the balance of the year will be like a Christmas bonus cheque.
Good luck to my fellow Realtors… please pump the market so I can sell my listings.
jeff:
for you my man!
http://tinyurl.com/24gt4z
scary halloween open houses don’t sell …go figure
me thinks i’ll go out partying dressed as Rob….
now that’s scary….. a Rob clone 🙂
blueskies,
hmmm… maybe a halloween open house might work… people are out anyway.
Jeff,
Do you have website that people can visit?
I have a website… but I want to keep my identity a secret as I am not your typical Realtor.
I don’t pump the market. I tell sellers reasonable prices to expect for the sale of their properties, but I will take on listings that are overpriced when I need business… I too need to eat.
I am not afraid to ask for price reductions when properties are overpriced and not selling.
I don’t work with buyers because I think they are too time consuming, not loyal, and I don’t want to be considered responsible for peoples losses when the market sinks.
“I have a website… but I want to keep my identity a secret as I am not your typical Realtor.”
Yes Jeff we believe your a realtor. Makes sense keep your listings a secret.
News Flash,
My listings and my website gets tremendous exposure… but what I mean is that on this website I choose not to reveal my identity… after all, what Realtor would actually say they think the market is 100% over valued and they expect prices to fall to half?
“after all, what Realtor would actually say they think the market is 100% over valued and they expect prices to fall to half?”
I would expect any realator who believes this will happen to openly say so. It might get you some business selling peoples properties before the crash. I remember getting a mailing about 18 months ago from a realator saying the market had peaked and it was time to sell. I am not sure it is the realtor’s job to predict market direction. It is the realtor’s job to market a specific property not the market in general.
It is fairly obvious Jeff you are not a realator. If you enjoy the charade continue on.
http://tinyurl.com/2y3p28
But two months on, the credit markets still look decidedly sick.
and it is proving hard to sort out the mess.
But it is also clear that the financial system is less sound than it seemed.
from the Economist
mining for good news 🙂
News Flash,
thanks I knew you’d get it. I agree, my job is to market my clients properties, not discourage the sale by talking doom and gloom. also, who would list with someone that doesn’t believe in the “strength” of the market?
Jeff,
you are not a realtor,you are a desperate buyer.
satv is a Nigerian widow woman.
Bears are most vulnerable from climate change if they do not adjust them self accordingly with the time.Poster without names are more vulnerable because they scare too much to name them self.Ps see the example above.
SATV,
Your mothers your Dads Sister’s Mother!
You make no sense, SATV.
HEE, HAW, HEE, HAW
Just because Jeff does not want to reveal his identity doesn’t mean he is not a realtor. He is on another realtors blog and that would be intruding on Rob’s business if he was advertising his properties or services. After all it is Rob’s blog, not Jeff’s blog.
Oil hit another new high $93.22 before it eased off into the 92 range.
Canadian dollar hits a new high 104.36 but has also eased off into the low 104 range.
The highest rate on record for the Canadian dollar (1950-present) is US$1.0614 on August 21, 1957.
If we go past this mark we are entering uncharted waters.
Real estate market still booming in B.C.
http://tinyurl.com/2tdzqh
(interesting that article states how everyone is still buying here, but contradicts itself at the end with Canadians purchasing in the U.S.)
Credit crunch pinches Bay Street bonuses (Canada)
http://tinyurl.com/2aolxg
Will $100 oil cause the next credit crunch?
(Central banks have been dabbling in it to get the price down, although this is not obvious to most investors)
High oil prices fuel inflation. High dollar helps control inflation.
Coco:
from CTV article:
Muir points out foreign investors are not a big enough group to push the market drastically.
Muir says a survey by Canada Mortgage and Housing Corp. in the 1990s found that almost one in two downtown Vancouver condos was investor-owned and rented out as income property. But the vast majority of investors were from the area
outsiders can’t hold it up and local insiders are in it for the appreciation and maybe the joy of negative cash flow…
…again, how long will this last?
Jeff,
Sound like you are an honest realtor that spell out your belief. In that case, why keep your identity secret! People need more sale agent like you these days. Rob is very open minded that, I dont think he would mind another sale agent posting and sharing market information on his blog. Right Rob?
remain anonymous..
tqn… is that your real name?
tqn,
Realtors have been known to be territorial. Realtors have been known not to like some other realtors and try not to deal with them if possible. Realtors have been known to bad mouth other realtors behind their backs. Office politics is everywhere.
“blueskies
October 29th, 2007 at 8:18 am
remain anonymous..
tqn… is that your real name?”
it’s my initial, and i dont claim to be a RE agent.
“I agree, my job is to market my clients properties, not discourage the sale by talking doom and gloom. also, who would list with someone that doesn’t believe in the “strength” of the market?”
a regular seller asks your opinion about the stage of the market, you dont tell him the truth which what you believe? If you believe in doom and gloom, why not disclose to you client?
“but I want to keep my identity a secret as I am not your typical Realtor.”
could it be a case that you signed a listing contract but send your secretary to handle the open house?
“Realtors have been known not to like some other realtors and try not to deal with them if possible. Realtors have been known to bad mouth other realtors behind their backs.”
You dealt with the wrong guy; the guy I have been working with, is very honest, approachable and networking. And I would not put all the realtors the way you put it.
it’s an American thang!
http://tinyurl.com/2cwmt8
quote:
Rising mortgage payments and tighter lending standards for refinancing amid the subprime credit crisis have dried up once-easy access to home equity loans for many middle-income borrowers — so desperate borrowers are using credit cards to cover basics while trying to keep up with home payments.
can’t happen here, everybody and their dog pays cash 🙂
jeff:
do you have any knowledge about “ghost” listings?
….properties that were on the MLS, expired or were canceled but are still available for sale only w/o a current MLS number
I’m trying to get a feel for the inventory overhang in the market.
The only thing I can think of is that listings can be signed as a “Multiple Listing Contract” or an “Exclusive Contract”.
I only sign Multiple Listing Contracts because without the exposure of MLS it is extremely difficult to sell a property.
Exclusive Contracts are used for example when someone wants to assign a property prior to the builder allowing advertising on MLS. (When assignments are on MLS the builder has given written permission.)
I guess a careless Realtor could miss the expiring of a listing, but that would be unusal.
http://tinyurl.com/yqbvnd
we’re from the government and we are here to help…..
does the weakness of the US dollar concern anyone? it’s getting pretty bad down there.
property values are falling at a rate of $5,000 per week in some places.
property values are falling at a rate of $5,000 per week in some places.
long term depreciating asset class
boomers looking to retire may rest a little uneasy…….
the party is over.
Concern anyone? why would we be concerned? We live in Vancouver, we’re immune to everything.
LOL over the clips below. Check them out and entertain yourselves.
Its Credit and its Crunchy
Meeting the Adviser
Is moderation new just now or it’s been there just that I wasn’t aware of it.
Where are the numbers already. WE WANT CHAN…..WE WANT CHAN!
Annon:
Approval is the same as always. 2 links or more gets you tagged as potential spam, and requires approval.
tqn,
I was just giving some examples of realtors office politics, not generalizing.
Coco:
Take another look at the statement, and replace “Realtors” with ..well, absolutely anything. Its pretty amusing, really:
“[insert your favourite career here] have been known not to like some other [insert your favourite career here] and try not to deal with them if possible. [insert your favourite career here] have been known to bad mouth other [insert your favourite career here] behind their backs.”
Are you implying that if Jeff says something controversial that I won’t want to deal with him? Or are you implying that other Realtors won’t want to deal with him? That seems like a stretch to me.
If Jeff is a Realtor (and I have no reason to disbelieve him), he’s welcome to share any insights with everyone. He’s not intruding on my business, as you surmise. There’s plenty of business out there for good Realtors.
I would actually prefer that he use his real name once he identifies himself as a Realtor. I think it would lend more credibility to both his opinion and to the blog itself.
Jeff:
If you want to maintain anonymity I’d love you to contact me privately and introduce yourself. I’ll be happy to then both keep your secret and vouch for you.
The Last Laugh – subprime
Rob,
I’m really not applying anything towards Jeff or you. I’m just making comments in general about some office politics I have witnessed in the real estate industry. Not all realtors welcome other realtors into their territory.