Tuesday Numbers

There were 75 price changes, of which 7 (9.33) were increases and 68 (90.67%) were reductions. The average original price was $720,269, while the average new price is $707,308 (-12,960/-1.8%). Average DOM to price change was 45. 

 0.61% of all active listings had their prices reduced Tuesday.

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180 Comments

Filed under Daily Numbers

180 responses to “Tuesday Numbers

  1. DaMann

    Sorry for being a tad thick but what do the over 90’s mean exactly. Are listing contracts typically 90 days. So these are listings that didn’t sell and were pulled off the market? Or?

  2. DaMann

    Ok after reading my comments. I’m certain they are not expiring, or else the numbers would be vastly different. So what does the over 90’s mean and what is the relevance of the number?

  3. paulb

    It just shows you how many listings as a percentage are over market value. This number rising is very bearish. If it grows it shows listing prices are off or sales are slowing.

  4. newvan

    Average sale priced dipped until $500k. The first time in how long?

    Possibly suggesting lower volume in higher priced properties.

  5. robchipman

    DaMann:

    Paulb’s description is blunt, but accurate. It starts with a CMA. You traditionally get 3 comps that are active, 3 that recently sold, and 3 expiries. The logic, all things being equal, is to price a little less than the competition (the three actives) and a little more than the recent solds. You look at the expired listings with the seller and say “The third group of sad, pathtic little listings are those that didn’t sell after extensive exposure to the market. The market has looked at them, evaluated them, and rejected them. I think we both can see why”.

    Obviously practice is more difficult than theory. Its always hard to find great comps, and the hardest comps to find are expiries. Over the years we’ve started equating over 90 day istings with expiries (they’ve had sufficient market exposure, yet haven’t sold).

    It is an indication of what’s going on. Paulb highlights one value, but you ahve to look at other things as well. If DOM of sales is dropping while over 90s is rising it kind of indicates that buyers have a very firm idea of value and are willing to act quickly on it (and we’ve seen that). If over 90s goes over, say 30%, and DOMs of sales climbs to say 100, then we know we’re in a substantially slower market thatn we’ve recently seen. You can put all kinds of combinations together and speculate on the meanings.

    You can also compare O/L numbers to over 90s. O/L sell faster, and for more, than over 90s. Wonder why?

  6. DaMann

    Thanks for that Rob. Appreciate it!

  7. BOBBY BEAR

    what could spur a down movement in Vancouver?

    How about a coming vicious bear market in the American stock markets? then massive layoffs in the banking and brokerage industries.

    Man can u guys read??

  8. whitebear

    http://www.zillow.com/real-estate/WA-Bellevue-facts

    People like to tout how bad the real estate market is doing down South. Well, according to zillow, the Bellevue market is up 5.8% year over year. The US market as a whole dropped 5.9%. If dropping 5.9% is what the doom-sayers can come up with as proof “see. the market down south is in a dumpster”, I rest my case.

  9. VAB

    The Loony is up 30% over the past couple years against both the dollar and the Yuan. Is that going to take the steam out the the “rich foreigner” explanation for price rises?

  10. /dev/null

    Bellevue is lagging (up and down). YOY change isn’t particularly informative at inflection points.

  11. blueskies

    massive negative sentiment cannot be ignored over the longer term.

    vancouverites will get the message and the market will turn (continue turning because i feel that the downturn is happening now)…..

    the flight to safety of equity capital to the RE market is a non starter… commodities are fungible, real estate is local and can be totally illiquid.

    me thinks this is wishful thinking

  12. Anonymous

    Whitebear:

    A) Those numbers always lag.
    B) Even the most optimistic observers say this is just the beginning.
    C) Relative to Vancouver the US (as a whole) was absolutely sane (161% overpriced there vs 225% or more here).
    D) It’s a self reinforcing cycle, just as it is on the way up. We’re just seeing what can definitively be called the beginnings of the collapse.
    E) Of all the cities in North America, when asked which was bubbliest, Robert Schiller (Yale professor of Economics and considered by most of his colleagues to be the best mind in bubble economics) picked… You guessed it, it begins with a V (and it’s not Vanderhof).
    F) Part of the rise in prices to the immediate south is due to the insane prices here and the above parity dollar. You’re pointing to a region that’s being supported by our insane bubble and using it as an example to show that we don’t have an insane bubble, you might as well pick Chilliwack or Abbotsford…

  13. tony danza

    whitebear, If you had bought a condo for 600k with 10% down and its value dropped 5.9% you would have lost 59% of your investment. If losing 59% of your capital doesn’t perturb then hats off to you!

  14. robchipman

    TD:

    I’m just doing some paperwork on some properties I bought in mid-2005. I’ll use one as an example. I bought it cash. Within a year I mortgaged it for 50% of appraised value, which meant I had 16% equity left in the property. It carries itself right now at under market rent.

    So, let’s say I bought for $100,000, took $84,000 out, and now have a positive cash flow property for $16,000. It was appraised at 168,000 a little over a year ago. What’s it worth now? What’s the effect of a 5.9% drop on my equity? Do I lose 59% of my capital? Is there any lesson to learn about buying with acceptable metrics and then improving them?

    Clearly I’ve been blessed by some appreciation, but then again, we’ve been told that the writing has been on the wall for several years now.

    Anonymous:

    When you say even the most optimistic observers say this is just the beginning, you’d don’t beleive that do you? That sounds an awful lot like “There are no bulls left” when in fact there are bulls everywhere. Hell, they’re advertising US property on CKNW (buy low, sell dear).

  15. whybuywhenucanrent

    On the over 90’s, what’s a CMA?

  16. Johnnyrent

    Here is some interesting grist for the mill from CNN/Fortune Magazine. It speaks to an ultimate return to fundementals (prices versus rents) and it projects real estate prices for most US cities, five years from now: http://preview.tinyurl.com/3yj3la

    I note with particular interest Portland and Seattle, neither of which are as frothy as Vancouver, but both of which are projected to fall 20% or more.

  17. Anonymous

    Rob

    “When you say even the most optimistic observers say this is just the beginning, you’d don’t beleive that do you?”

    Find me an article or any kind of reputable source that says the US market is done falling or that the worst is over.

  18. dingus

    whitebear:

    5.9% as a nationwide drop is HUGE. A couple of years ago the NAR used to spout that nationwide prices have never dropped. And therefore never would. Lo and behold, a sizeable drop. With more to come. It is unprecedented and a stake through the heart for the self reinforcing bubbly thinking that created the spiral of ever increasing prices.

    Whatever happened to “sticky on the way down”?

  19. DaMann

    That’s a 5.9% NATIONAL drop. Some markets only went up a fraction, Dallas? So some are not droping much or at all. If you gave the option of a 5.9% drop to the people of Miami, Las Vegas, some parts of California, they would snatch your hand off. Some parts of Miami have condos being auctioned off for 50% of their peak value.

    Same goes for here. Places like Halifax may never crash cause they never went up much to begin with.

    5.9% drop is pretty damn big on a national level and it has only just begun!

  20. whybuywhenucanrent

    Anyone want to speculate when the Loonie will top $2.68 again?

    I see a couple possibilities:
    * US has 2.5 trillion in annual income. It’s now overmortgaged by $1T and has $T in credit card debt. Let’s say there’s an average of 12% interest on the sketchy debt, that’s 10% of the national income. It’s easy to see this being a big enough problem to take out the economy as a whole.

    *US is in a messy war, it will keep costing $$$, won’t provide economic benefit. There’s another $1T in debt held by the gov’t for fighting the war, that’s another $50B that has to come out of the economy to service the debt annually.

    * The housing bubble was bigger than the tech stock bubble, the tech stock bubble was bigger than the Asian markets bubble of the late 90s., Asian markets bubble was bigger than the previous bubbles, I suspect, whatever they were. Investing in Japan in the 1980s? If shorting the US $ is the next bubble, there’s a lot of wealthy people out there shuffling their $ from one bubble to the next, if shorting the US $ is bigger than the housing bubble, it will run the $ way down. Hello $2.68 exchange rate for the Loonie?

    * US gets itself in another messy war, bombs Iran. What’s the economic benefit?

    * US gets bombed internally by terrorists–dirty bomb, biowarfare, takes out a popular city (more popular the New Orleans–like maybe San Diego) and the country feels it has to spend megabucks rebuilding. Where’s the net benefit?

    * US gets hit by a big natural disaster–Force-9 earthquake in Seattle or Denver, hurricane in New York City, wouldn’t this have a serious negative effect economically?

    It’s hard to predict if any one of these things will happen, but its entirely possible that one or several will happen in the next year or two.

    How high would the Loonie go?

    Or how many of the above would have to happen to challenge the old high of $2.68?

    (Off topic, I know, but it’s the news of the day)

  21. deb

    wow when was it $2.68?

  22. WoW

    Fundamentals and gravity – they both catch up with u eventually.

    Castles in the air….

  23. dingus

    Also, the numbers for king county are:

    Active Listings: up 36.76% YOY
    Pending Sales: down 29.88% YOY
    Median Closed Price: $443,950 – up 0.90% YOY

    (Courtesy Seattle Bubble)

    Wow, up a whole 0.9%! To the moon Alice!

    And the four counties around puget sound — up 1.3% yoy.

    hissssssss…..

  24. DaMann

    Dollar hit $2.68 somewhere in the late 1800’s, but I also read that at that time it wasn’t a “free market”currency. What they meant exactly don’t know. As far as a free trading currency goes, I believe we are in record territory.

  25. dingus

    Housing tracker has Seattle at 0% yoy, with inventory up 29% in three months.

    http://www.housingtracker.net/askingprices/Washington/Seattle-Tacoma-Bellevue/

    Courtesy, Fish.

    Anyway, Bellevue? Zillow? Who gives a #$%. The air is coming out of the Northwest, too.

  26. anonymixer

    Or how many of the above would have to happen to challenge the old high of $2.68?

    Add in another “civil war” (not beyond the realm of possibility), and we’re there.

    Maybe Uncle Son of Sam will attack us because they hate our economic clout (and freedom to smoke weed), and they want to put us back in our place – that would bring our buck to a brake-burning halt.

    (of course, I jest)

    I was saying “a dollar and fourteen by Hallowe’en”, but it looks like I was off by a week or two.

  27. Strataman

    http://tinyurl.com/27w3b2

    Note: People typically won’t spend more in monthly costs to own a home than they would to rent. While prices soar from time to time, sending the ratio to exceptional heights, the relationship eventually should return to its historical average.

    Huh? Seattle Set to drop 19.5% over five years, isn’t that where Vancouver’s branch of Microsoft is? Plus 25 other down and out small US cities!

  28. Wise Guy

    Such silly prognostications. Are people STILL saying that Vancouver is “diiferent”?

    Strange. Very strange.

  29. Strataman, I was just about to post that bit …

    “While prices soar from time to time, sending the ratio to exceptional heights, the relationship eventually should return to its historical average.”

    Looks like CNN Money was smart enough use the word *should*, surely in consideration of Vancouver, which, as everybody knows, is the only market where mean reversion doesn’t apply.

  30. Jeff

    So what are the chances that investors in Vancouver condos will sell them now to free up Canadian high flying loonies for purchases south of the border such as California & Florida?

    Surely, it would be nice to retire in Vancouver in the summer… but don’t Canadians like to winter in warmer, less rainy locations.

    Also, with prices nose diving in the US, Canadian investors must be getting the feeling that Vancouver may be close to peaking.

  31. blueskies

    http://tinyurl.com/5n7os

    scroll through these charts….. and pour yourself a stiff one……

  32. coco

    One may wonder what happened to the Canadian dollar today. It shot up to 1.10 but fell back down to 1.07

    Would you believe it was Alan Greenspan? He seems to have a better effect on getting the currency down than David Dodge.

    “Alan Greenspan said the effects of a subprime mortgage crisis may be felt in Europe and Canada, and in Japan indirectly.”

    And…that did it.

  33. Markets are cyclical, housing is a market

    Thanks goodness for Greenspan.

    He sobers the stupid.
    Brings vision to the blind.
    He’s a carnivore that eats blind bulls.

    A delight!

  34. coco

    Jeff,

    The listings shot up today, so maybe some investors are bailing out already?

    Listings shot up in the Fraser Valley today too.

  35. coco

    Morgan Stanley suffered $3.7 billion in losses over the last two months on its mortgage related investments. Also stated its losses may rise to $6 million, if markets continue to sour.

  36. coco

    Merill Lynch revised their subprime exposure to $27.2 billion now, $6.3 billion more than what was disclosed last month.

  37. coco

    Someone in the U.S. should start a newspaper or website called “Subprime Today”

  38. aetakeo

    Cyclical Market — I think some of this creation of this bubble is Greenspan’s doing. He was rather irrationally exuberant with the stupid cheap credit.

  39. Markets are cyclical, housing is a market

    Aeteko,

    Maybe your right, but then Vancouver general pop has been irrationally exuberant as well. I mean the Government’s CHMC medaling manipulation. With every lame ass introduction things just seamed to soar.

  40. Markets are cyclical, housing is a market

    Introduction, I mean the many introductions of easier and even easier affordability. Now the only ones renting are those waiting for sanity and those who have really poor credit.

  41. Concerto

    “Thanks goodness for Greenspan.

    He sobers the stupid.
    Brings vision to the blind.
    He’s a carnivore that eats blind bulls.

    A delight!”

    Don’t forget to include:

    “He caused the problem in the first place”

  42. Anonymous

    coco, many internal bank analysts predicted a conservative 1.10 in late August. People bought on that advice in August-October, and took profit when it hit 1.10. That is what it meant by running into resistance. Once this resistance is ‘defeated’ expect it to continue to climb as it’s all bad news for the USD. Bank of Canada seems likely to hold. China is diversifying. The Fed may lower yet again.

    Currencies were on the gold standard until 1971. Comparisons between currencies before that time are invalid when looking at today’s currencies. We are in uncharted territory as far as CADUSD is concerned.

  43. coco

    Bernanke spoke this morning, warned on slower Q4 growth. Canadian dollar then moved back to 1.08 terrority.

    Bernanke Says Fed Sees Slower Growth, Inflation Risk

    http://tinyurl.com/2m2ef2

  44. blueskies

    http://tinyurl.com/22c2pe

    New house price growth slows again in Sept.

    Only two western cities showed growth in year-over-year increases in September.
    Prices rose 29.6 per cent in Regina in September, In Winnipeg, selling prices rose 16.2 per cent,

    from CBC trusted Canadian news source

  45. blueskies

    http://tinyurl.com/2bgtzd

    October housing starts tumble 22%

    CMHC stats……

  46. coco

    Anonymous,

    Yes, I’m aware of the various pegs/standards in the past. It seems we are in a lot of uncharted waters since subprime and credit crunch started. Certainly interesting though.

    Do you trade currency or dabble in it yourself?

  47. coco

    U.S. Retail Sales in October Trail Analyst Estimates

    http://tinyurl.com/3yvx3j

  48. coco

    Dollar 107.79

    Oil 97.29

    Gold 845.30

  49. coco

    Dollar falls to 106 level now

  50. robchipman

    WBWYCR:

    CMA = Comparitive or Competitive Market Analysis. Its a way of valuing properties.

    Anonymous:

    Find you a reputable article? Reputable defined as what? Someone who agrees with you? Sorry, that’s not going to happen.

    You said “even the most optimistic observers” think the carnage has just begun. That’s about as accurate as saying the debate over global warming is over and that everyone agrees (complete with a subsequent dismissal of deniers – the “we all agree except those who don’t agree, and we dismiss them as nut-bars or mercenaries, so really, we all agree” non-logic).

    You can’t really have missed recommendations to buy undervalued US properties. They are not uncommon.

    (Take note that I’m not arguing that the housing troubles in the US are over. I’m simply pointing out that the statement that even the most optomistic observers agree the carnage has just begun is hyperbole).

  51. Jeff

    markets are getting hit… looks like anything considered overvalued is being sold.

  52. Monbiot

    Sorry, couldn’t let the global warming comment pass. Housing prices, blah blah blah. Climate change, now you’re talking about something important. The only people who argue that climate change isn’t happening or isn’t important are specifically paid to do so by vested interests. They are the ones for whom the words “obfuscation” and “disingenuous” were invented. Read George Monbiot’s “Heat” for the real story.

  53. Annon

    US Fed’s mandate is to ensure domestic price stability. And by that, they mean, other than housing and energy prices for everything else have to stay around 2% inflation rate. Bernanke is playing the silly game and ruining the economy in the long run. Just look at “Bernanke Says Fed Sees Slower Growth, Inflation Risk”.

    Slower growth -> lower interest rate
    Inflation risk -> interest rate hike

    Do they cancel each other so interest rate holds? If Bernanke so much as lowering interest rate again, then inflation will be high pretty soon due to weak US dollar. And knowing this, you know this whole inflation game plan isn’t making sense and isn’t working at all. It’s just lame but Bernanke is incapable to do the right thing because the Fed’s mandate is, again, to ensure domestic price stability.

  54. Wet Coaster

    Rob:

    I wanted to thank you for your honest numbers and continued insightful commentary. Refreshing coming from someone in the real estate profession.
    Cheers!

  55. BOBBY BEAR

    ya…the Dow30/Gold ratio is coming down nicely.

    Wonder if it could approach a 1:1 ratio like it did in the depths of the Depression in 1932 and more recently during the peak of the inflationary blowoff of 1980? It is called the Pendulum Theory. I made it up.

    And trust me…veterans have seen extremes…Gold $6000? Dow30 6000?

  56. Grin and Bear It

    Rob, are you trying to suggest global warming is not happening or were you just repeating a statement?

    Did anyone hear about what happened to the investigation at that New West condo fire? I think the development was called Copperstone?

  57. robchipman

    Monbiot:

    You kind of make my point. The only people who disagree with global warming are people paid off by vested interests, right?

    OK. Full disclosure. I’m not an expert on global warming, and I’m not arguing that it exists or doesn’t and I don’t want to change the topic from real estate/debte tactics to global warming. But…

    What do you mean by disagree? A UK court recently made a ruling to the effect that Al Gore’s movie was political propaganda, no? Whether the ruling is right or wrong, does that qualify as “agree” and if not, was the court paid by vested interests?

    Another example: if I were to dismiss Kyoto as unworkable and recommend that it be discarded (and if I did that, say, 5 years ago) would it be because I’m paid by a vested interest? Would it mean I disagree that global warming is a threat?

    Or, let’s just say I was…an uninformed observer, and I asked: how come the Vikings apparently called places Vineland and Greenland when we know that vines can’t grow there and the place isn’t green, but covered in ice (even if the ice is melting now)? Does that put me on the payroll of vested interests?

    In other words, people do disagree about both the US real estate market and global warming, and the ones who disagree with you (note I didn’t say the ones who disagree with the truth) aren’t all paid mouthpieces. I’m sure some are, but let’s face it: both sides have spin meisters who depend on the debate for their incomes/fortunes/advancements.

    G&B:

    I was commenting on the debating tactic of dismissing anyone who disagrees with you a) non-existent and b) if they do exist, not important, honest or trustworthy. The global warming debate is just one example. It has become dangerous to even use the word “debate” in conjunction with “global warming”, regardless of your position on the issue itself.

    To be a good person I should agree that global warming is decided, caused by man, the biggest threat to our existence that ever existed, and solvable. To do otherwise casts doubt over whether I can possibly love children and puppies. (The biggest threat to our existence ever? Can anyone who watched the news prior to the mid-80s possibly have such a short memory? Anyone remember a documentary called “If You Love This Planet”? Seemed like a pretty big threat at the time, and it wa a whole ‘nother type of global warming. Am I wrong, or did we have more people marching in the streets on that issue?).

    Global warming is a huge and complex topic. There’s a lot of confusing stuff there. To conclude that the debate is over and decided strikes me as ridiculous. I mean, do we really think Al Gore, David Suzuki and Leonardo DiCaprio even agree with each other 100%? I’d bet $20 that we can find plenty of disagreement among global warming believers. A lot of them would probably disagree with each other and then trun around and claim, with a straight face, that the debate was settled. Kind of makes you wonder.

    If Anonymous says something to the effect that even the most optimistic observers agree that the US meltdown is only beginning, he’s engaging in the same tactic. Its a false statement. He’s either ignorant of what’s going on in the world or he’s dressing up falsehood as truth to bolster his argument.

    I haven’t heard the bottom line on the New West fire, but I have, of course, heard the juicy rumours.

  58. dingus

    Rob, you picked up a big ol’ pile of steaming poo by using climate change as an example where there is a balanced debate and credible experts on both sides.

    The scientific consensus is that there is overwhelming evidence that CO2 produced by humans is causing climate change. The IPCC report, for example, involved a large number of the most credible climate scientists across the globe. The stark conclusions there were actually negotiated DOWN from stronger positions held by many of the scientists involved.

    Consensuses (consensi?) are not always right. There is always groupthink and a herd mentality And there are always critical voices with valid points that argue against the consensus. There are also co-opted wishful thinking wack jobs that can find scientific correlation in a bowl of alphabet soup. Have you seen the chart where control of the US Senate was correlated with sunspot activity?

    At this point, though, the central thesis around global climate change really doesn’t have much credible opposition. It’s like a news report about gravity, where Jill Krop would put on her frowny face and say “but some say, that’s just a theory which isn’t true”. Some do, but they are marginal.

    Anyway, the point you were trying to rebut was that there are alot of credible voices that are saying the carnage has just begun. The poster used somewhat hyperbolic language, but the point is true. A lot of very credible analysts ARE saying the carnage has just begun. They may be wrong. But I’d put a lot of weight on the growing chorus of doomsaying from more mainstream quarters. With each passing day, Roubini for example, once mocked as a Chicken Little, appears more and more prescient.

  59. Anonymous

    Rob:

    “Find you a reputable article? Reputable defined as what? Someone who agrees with you? Sorry, that’s not going to happen.”

    Yes, way to win the debate, rephrase my position to make it untenable and then beat the straw man to death. You’d make an excellent Bush/Cheney press secretary.

    How about reputable as in major news outlet or an accepted authority on the subject who doesn’t get his paycheque from realtors.

    Remember there’s a difference between optimism and magical thinking. And there’s also a difference between optimism and propaganda.

  60. dyugle

    benchmark down slightly in october
    $539700 vs $542500 in september but still up 11.7% yoy.
    http://www.realtylink.org/hpi/rebgvhpigraph.cfm?date=1007&TYPE=buyers

  61. robchipman

    Dingus:

    “Anyway, the point you were trying to rebut was that there are alot of credible voices that are saying the carnage has just begun”

    No, actually that wasn’t what I was trying to refute. There’s a world of difference between “a lot of credible voices” and ëven the most optimistic observers”.

    “The poster used somewhat hyperbolic language,…”

    Exactly. I’m pretty certain I said that he was using hyperbole myself. That was the point.

    “…but the point is true” If the point is that “a lot” of credible people hold that position, then yes, its true.

    If the point is that the carnage has just begun and the debate is over, the position is obviously flawed. Some say we’re in the trough now and that we should buy distressed US properties. Others have months of records showing that carnage underway. Yet others say that the use of words like “carnage” is extreme. Those different positions are self-evident. They’re in the mainstream media, and not all of them are arguing about whether values have dropped or not.

    Think about it: a guy who started pointing to the meltdown four months ago, and pointed out that it would last, say 18 months in total, at a minimum, is unlikely to say that its just begun now that its 25% underway according to his own observations. He’s more likely to say its been underway for a while and has delivered some severe shocks to other parts of the economy. Take a look the through this blog’s back pages. Those guys exist, and their statements are still here for you to read.

    Anonymous:

    I haven’t made your position untenable. You did that all by yourself, I think. There’s nothing in the statement worth spending much time refuting. If you really mean it you’re either ignorant of what’s going on in the world or you’re pursuing some other agenda. I’m saying not everyone agrees with you, and you’re saying “Yes they do. And if they don’t its because they aren’t serious or they’re paid to be dishonest”. How can anyone take that position seriously?

    You made a statement. I think you exaggerated. I called you on it, and gave you a chance to clarify your position (“That sounds an awful lot like “There are no bulls left” when in fact there are bulls everywhere”). You didn’t change your position one iota.

    “Optimistic observers” does not equal a major news outlet. Nor does it disqualify someone who makes a living from the pursuit (be it real estate or global warming). You’re just changing your tune, pure and simple.

    That said, the evidence that not everyone agrees with your position is readily available in the mainstream press. I don’t need to find it for you.

    Look back in the blog, as suggested, and you’ll find people putting the start time for the current problem months ago. Look at any number of articles or columns in the FP. Listen to some radio ads.

    Of course, if I’m over-reacting, and you agree that not all observers agree with your position, just say so. Otherwise, I’m afraid you’re biting off more than even you can chew.

    But who are we kidding anyway: I don’t like blatant exaggeration anymore than I like demonization. You like both of those things. That’s what you and I are really disagreeing about on this post.

    I find it funny that I recognize that I’ll be demonized if I don’t hew to the global warming party line, and you actually equate me with Bush and Cheney in order to justify your hyperbole. How long until Godwin’s Law is applied to the disagreement? 🙂 Keep it up. You’ll prove my point conclusively before too long.

  62. Tony Danza

    Rob,

    I found this interview over on the HBB: http://tinyurl.com/39hdt2

    An excerpt from the text:

    “Investors is the wrong term for what occurred here the last two years [Las Vegas]. It is amateur hour and these people were speculators. Unfortunately, a lot of the agents who sold them these properties did not have the skill set and shouldn’t have been representing these people. It was amateur hour all around. Dealing with investment properties requires a knowledge of cap rates, rates of return, IRRs, vacancy rates, credit collection factors. You talk with most retail real estate agents, they could not tell you what those terms are, yet they were out there selling properties to investors, telling them what great deals they were.”

    As our resident expert on real estate investment in Vancouver it would be interesting to see a post sometime in the future that addresses the metrics mentioned in the article. I’m not looking for an argument about why we can’t compare Vancouver RE to Nevada’s, just an honest assessment of professional investment metrics in Vancouver’s market. It would also be nice to see examples where we forget about the financing factor and assume the investor is someone who pays cash for the investment.

  63. Wise Guy

    “…just an honest assessment of professional investment metrics in Vancouver’s market.”

    – Tony Danza

    Good luck with that.

  64. Monbiot

    I agree with your point about real estate, but not the analogy to climate change. I said that only vested interests claim “that climate change isn’t happening or isn’t important”, not that there is no disagreement on what to do about it or how dire its effects will be. That’s why I was specific about where there is no disagreement. The very apt analogy that gets made often is to cigarettes and cancer. The debate went on for more than a decade after the scientific question was settled because it was in the interest of some to cloud the issue. How many people died because of that? Maybe we should be more suspicious of their motives this time.

  65. Anonymous

    I agree with you there Guy.

    Because any honest assessment that doesn’t include an assumed rate of appreciation is going to show that there are really no ‘investment’ properties in Vancouver worth buying. And because I just know Rob will swoop down on this one and start putting words in my mouth again. I mean “worth buying” in the sense that there are far better investments in the rest of Canada, in fact if you look you can actually find places elsewhere in Canada that are cash flow positive on no down payment if you’re willing to do the work of a manager (find one like THAT in Vancouver).

  66. Anonymous

    coco,

    I don’t have the balls to trade currencies. I fantasy trade and do very poorly.

  67. Anonymous

    I for one totally agree with Rob on the Global Warming/Real Estate analogy.

    On the one side you have intelligent people with science, reams of data and educated opinion. On the other you have magical thinking and denial.

  68. Grin and Bear It

    Rob, the debate on global warming is raging and it’s tough to point out exact issues etc. However, I am sure everyone agrees we are polluting our environment and creating/causing numerous negative results from our actions. I assume no one is trying to tell us pollution is ok for the environment! 🙂

    Rob, what rumors do you have about the New West condo fire??? I’m sure you won’t say…maybe a hint??? 🙂 hahaha

  69. ObserverX

    “…just an honest assessment of professional investment metrics in Vancouver’s market.”

    Tony D,

    Allow me to paraphrase Rob’s position:
    1) It’s tough to find good metrics right now.
    2) But I have “smart” investors who are still buying.
    3) Since they’re smart, the metrics must not be so bad.
    4) Therefore, it must be a good time to buy!

    Seriously, I don’t think you’re gonna get Rob to say that it’s a good *or* bad time to buy and in my view that is precisely the position he *should* take as a Realtor — their role is not to provide financial advice but to help you get the best deal *after you’ve made the decision* to buy/sell.

    My beef with Rob is that he speaks as if someone can simultaneously fulfill the dual roles of Realtor and RE Investment Advisor which in my view is unethical because in most situations, there is an inherent conflict of interest.

  70. dingus

    “There’s a world of difference between “a lot of credible voices” and ëven the most optimistic observers”.”

    The same world of difference between quibbling and being pedantic?

    Honestly, I don’t know what got up your nose with this statement, but the point doesn’t seem out of line to me. A bit over the top, but so what?

    So who are the optimistic observers who are saying all is well, it’s just a small lull? The NAR? Most of the stuff I see, from the previously sunny optimists in the mainstream media, is pretty gloomy these days. The optimists are pointing to a bottom in, what, Q3 08? There’s that CNN Money report profiling corrections in major cities of 15 – 30%. Sounds like carnage to me.

  71. robchipman

    G&B:

    Its funny you put it that way. I read a British MP a few weeks ago who asked: why don’t we talk about over-population when we talk about global warming? If we all reduce our emmission, but double our population, will it be ok?

    Rumours are rumours…go find your own!

    ObserverX:

    You probably should have waited to post. Sorry 🙂

    You were right on 1, and confused on 2, 3 and 4. (The classic: assuming he doesn’t want to get out of real estate completely, should the smart investor sell a worn out property in the city with huge land value and buy two new houses in the suburbs right now?)

    Care to explain the inherent conflict of interest between Realtor and real estate investment advisor?

    Anonymous:

    If you’re going to cry about it then I’m sorry, ok? But exaggerate and demonize at your own peril. If you’re going to say things like “I was being rude because he was just making stuff up to support his argument, apparently…” you should get a slightly thicker skin when people turn the tables on you. You exaggerated to make your point with whitebear, and then turned around and castigated coco for doing the same thing (and frankly, your case with coco was weak).

  72. Annon

    Bernanke under fire:

    http://tinyurl.com/3d6vnd

    Maybe there is a hope to cure bubbles. And yes, I think this news is very much related to the RE bubbles worldwide because when US panicked and lowered their interest rate to 1% for 18 months in Jun 2003, the whole world followed soon after to protect their trading volumes with US. And when US hikes rates, the rest of the world too hike the rates.

  73. Annon

    Yukon provincial government might have lost all of their surplus money.

    http://tinyurl.com/3cou7d

  74. Geezer

    Anonymous wrote:

    “I for one totally agree with Rob on the Global Warming/Real Estate analogy.

    On the one side you have intelligent people with science, reams of data and educated opinion. On the other you have magical thinking and denial.”

    That seems like a pretty harsh put-down on the bears. Denial is a fairly predictable reaction when faced with the unpleasant reality of lost opportunity, their occasional irrational ranting is to be expected.

    Let’s cut the bears some slack, just because they have been consistently wrong about the Vancouver RE market for year after year after year, it doesn’t mean that they have been guilty of “magical thinking”.

    It’s always easy to dump on people when you have the benefit of 20/20 hindsight but I can tell you that 3 or 4 years ago some of their predictions of imminent doom were quiet persuasive and some continue to be so.

    The bottom line is that none of us really knows where prices will be in 1 or 2 (or 10) years from now.

  75. robchipman

    Dingus:

    It is pretty small potatos. The guy exaggerated, and when I asked him about it he chose to stick to his guns. He could have just said “Yeah, I’m stretching a little to make my point”.

    What got up my nose was his double standard and his debating tactics. I called him on the exaggeration and asked him to confirm that I understood him. He choose to open the textbook, defy me to prove his ridiculous assertion wrong, change his tune, equate me with Bush and Cheney, and claim I’m putting words in his mouth. Classic.

    Whitebear said that if 5.9% drop nationally is the best the bears can come up with, then they’ve made a weak case for a meltdown.

    You countered by saying that 5.9% nationally is huge (which is a good point, considering the history of US housing). Fair point, I’d say.

    Anonymous made a one good point (price drops lag) and then started making stuff up and invoking the patron saint of bubbles.

    The funny thing is that he had already given coco a hard time for making stuff up.

    You used a good line: “A bit over the top, but so what?” If anonymous had said that in the beginning, he’d have completely won the point. I think giving him the chance to do that was a good thing. I notice he hasn’t tried to defend the claim – he’s simply cried foul and lashed out.

  76. Markets are cyclical, housing is a market

    GEEZWACKER,

    Bottom line is that markets are cyclical.

    Sooner or later Bears will be right, at least for a little while. I am a Bear…so what….I will buy when I feel R.E. isn’t so overly embellished and markets are stablized.

  77. Markets are cyclical, housing is a market

    This market is like a new recipe for a new type of dish.

    You throw in all sorts of ingredients and nobody knows what the final taste is like till that mixture finally cooks.

    Like CHMC’s medalling intro gimmicks to the market, give it some time to really see what happens. Then when the $h!t settles, see what RE prices really become.

  78. robchipman

    Awesome turnaround, Geezer! Talk about a two edged sword! He won’t like that at all 🙂

  79. ObserverX

    “Care to explain the inherent conflict of interest between Realtor and real estate investment advisor?”

    Are you being obtuse, Rob? Let’s see … suppose some noobie homebuyer goes to you and asks if it’s a good time to buy. You believe we’re in a bubble so as a RE Advisor, you’d like to tell him/her ‘No’ (for which you’ll get no commission) but as a Realtor you’d like to say ‘Yes’ (and perhaps get a commission). [In my view, the only ethical response for a Realtor is to offer no advice whatsoever and say ‘I don’t know; all I can do is show you what’s on the market’.]

  80. coco

    Tony Danza,

    Thanks for posting the article interesting read

    Annon

    Thanks, yours was an interesting read too.

  81. Skeptic

    Geezer, you are a mind reader 🙂

  82. chip

    “On the one side you have intelligent people with science, reams of data and educated opinion. On the other you have magical thinking and denial.”

    Not even the IPCC expresses this kind of certainty, so your level conviction can only be a product of faith, or dare I say magical thinking.

  83. blueskies

    “Care to explain the inherent conflict of interest between Realtor and real estate investment advisor?”

    i see it as on one shoulder a small red devil and the other shoulder a small whitish angel.

    devil sez: Buy now!

    angel sez: what does your advisor say?

    angel falls to floor ending the debate 🙂

  84. coco

    Rob,

    How is that magical delete key of yours working? Following that there is that magical block the url out of the blog key. Then again you can find out who it is by the url and ring the doorbell. A late Halloween present. Boo!

  85. blueskies

    http://tinyurl.com/3yzjrl

    no let up in global warming in this article:

    under the IEA’s most pessimistic scenario, warming could reach six C (10.8 F) if China and India continue their strong growth relentlessly, using coal as a principal energy source.

  86. Geezer

    Rob said:
    “Awesome turnaround, Geezer! Talk about a two edged sword! He won’t like that at all :-)”

    Heh! Heh! Rattle, rattle. 🙂

  87. Geezer

    Here’s an interesting article about the US economy and how it might impact Canada. It’s worth a read.
    http://preview.tinyurl.com/2vh2do

  88. Geezer

    Sorry, try this instead. The Title is “Will Canada catch what’s ailing the US?”

  89. Geezer

    Geez! See what happens when your old!
    Here’s the link. Sorry again – time for my warm milk.
    http://tinyurl.com/2vh2do

  90. blueskies

    good article geezer

    keeping in mind the RE market can still turn down despite the good economic news as is happening in US currently

  91. blueskies

    interesting graph…
    can it happen here?

    http://tinyurl.com/2y5ezh

  92. monica

    Unbelievable. The debate on whether there is human-caused global warming is long over Rob. The correct questions are to what extent we are affecting climate, and what the right course of action is.

  93. monica

    “Awesome turnaround, Geezer! Talk about a two edged sword! He won’t like that at all”

    Or maybe he doesn’t care much at all.

  94. blueskies

    The debate on whether there is human-caused global warming is long over Rob

    one of two elephants in the room being ignored,
    the other is peak oil.

    it’s all good…….. buy now!

  95. dingus

    “Awesome turnaround, Geezer! Talk about a two edged sword! He won’t like that at all”

    You’re weirding me out, man. “I’m rubber and you’re glue!”

  96. monica

    Global warming (and peak oil) are totally relevant topics for a real estate forum. What will happen to the value of people’s precious suburban homes when gas is 10 bucks a gallon or more? Prices need to go way, way up to properly reflect the environmental cost.

  97. robchipman

    ObserverX:

    I’m not being obtuse.

    I don’t consider a first time homebuyer is an investor. I don’t consider the principal residence an investment. We’ve had that discussion, and while I know some people disagree with me on it, I’m certainly not alone. My investment advice to a first time buyer would be: buy what you want to live in and can afford, pay it off quickly, and buy additional revenue properties.

    The conflict you construct is valid, but it depends on me doing things that I don’t do and thinking things that I don’t think.

    I disagree with you that I can avoid an ethical dilemma by pleading ignorance.

    Monica:

    I think you’re missing the point. I certainly can’t say that the debate is over. I read and hear about people who deny the cause, the effect and the fact itself. On a different level, if the debate is over, who won? (And don’t paint me as an evil denier, ok? I’m just aware that they exist).

    Anyway, my point is that the tactic of trying to win an argument by claiming that the debate (regardless of the subject) is over is really nothing more than sophistry. Effective? Absolutely.

  98. monica

    Rob, the scientific community is in agreement. Humans are causing global warming. The tactic of pretending that there is a debate is generally one where vested interests try to maintain the status quo.

    From wikipedia: A 2004 article by geologist and historian of science Naomi Oreskes summarized a study of the scientific literature on climate change.[29] The essay concluded that there is a scientific consensus on the reality of anthropogenic climate change. The author analyzed 928 abstracts of papers from refereed scientific journals between 1993 and 2003, listed with the keywords “global climate change”. Oreskes divided the abstracts into six categories: explicit endorsement of the consensus position, evaluation of impacts, mitigation proposals, methods, paleoclimate analysis, and rejection of the consensus position. 75% of the abstracts were placed in the first three categories, thus either explicitly or implicitly accepting the consensus view; 25% dealt with methods or paleoclimate, thus taking no position on current anthropogenic climate change; none of the abstracts disagreed with the consensus position, which the author found to be “remarkable”. According to the report, “authors evaluating impacts, developing methods, or studying paleoclimatic change might believe that current climate change is natural. However, none of these papers argued that point.”

  99. dingus

    “I read and hear about people who deny the cause, the effect and the fact itself. ”

    But who? Who are they? How credible is it?

    “if the debate is over, who won?”

    Seriously? It’s about winning? Isn’t it more about weight, credibility of arguments, balance of probabilities, weighing evidence, determining a course of action based on a some credible prospect of risk? Or is it just a highschool debating team thing with you?

    “The tactic of trying to win an argument by claiming that the debate (regardless of the subject) is over is really nothing more than sophistry.”

    And the tactic of saying there are people who disagree so any counterargument is valid is… what, exactly?

  100. blueskies

    I live in CV. In about 2004 there were barely 200 homes available and there are now over 9000, but the sellers are being stubborn and the prices are not dropping quick enough. Right now the thinking is the Canadians are going to save everyone because of the devalued dollars, they will all buy here. Just because our money is becoming worthless doesn’t mean they are lemmings.

    from HBB… too funny!
    we are gonna save their collective bacon?!?

  101. rob

    Friend of mine lost the job and he had to get his mortgage renewed.Bank refused to renew his mortgage and forced him to sell his aptt.CAn we imagine the scenario after 2010 when there won’t be anymore speculative buying and lot of layoffs?

  102. monica

    “Anyway, my point is that the tactic of trying to win an argument by claiming that the debate (regardless of the subject) is over is really nothing more than sophistry.”

    I am not the one who is deceiving. It is those who keep pushing the idea that a debate rages within the scientific community who are deceitful.

  103. dingus

    “I am not the one who is deceiving. It is those who keep pushing the idea that a debate rages within the scientific community who are deceitful.”

    Oh-oh. Hyperbole!

    Rob’s argument is a common one. The logical extension of it is that there is no point at which one needs to concede. There will always be someone who disagrees — ergo, the debate rages! Stalemate!

    The fancy word Rob used is sophistry.

  104. /dev/null

    Wow, Rob. I *totally* think you should try an Intelligent Design analogy next.

  105. Cheek Monk

    Who is buying all these real-estate? I can’t afford anything anymore. It’s so crazy. Do I wait till after 2010 to see if price drop? What if it continues to go up and up. So many people are telling me to buy now before it’s too late. So much pressure. Are there real growth in BC to justify the increase in home price? If not the Americans, who are the buyers? How can local BC ppl afford these prices? Min. wage is at $8, forest industry is down, so where is sustainable job growth once all the big construction projects are done?

  106. robchipman

    Monica:

    OK. The debate is over. Global warming is real, and everyone agrees that its real and man-made.

    There are people who pretend there is a debate, but they have vested interests in doing so, so they can’t be given any credence.

    Couple questions, of course. Pretty obvious ones. Don’t we all have a vested interest in the issue? I mean, we all live here, and if global warming is caused by us and is the biggest threat ever, we have a vested interest in reversing it regardless of where we stand, right? So dismissing someone for having a vested interest doesn’t work.

    Now, the issue of pretending that there is a debate seems an awful lot like a do-over of disagreement dismissal. I say (for example) that something isn’t happening, you say that it is happening, and that my position is bogus because the debate is over. I don’t buy your position, so you “do it over” and say “The debate is over, you recognize that, but now you’re simply pretending it isn’t” How can you possibly know I’m pretending?

    Take note that I’m not denying global warming. I’m not even commenting upon its effects. I’m just pointing out that people disagree on many facets of the subject.

    At the same time its become acceptable to say “The matter is closed for discussion”. And that tactic is used in other debates, with different degrees of success.

    What exactly is the success? The debate (whether about glbal warming or the US real estate market) gets polarized or shut down. With global warming you have to have pretty big cojones or be plain crazy to deny it. Does that help us do anything concrete? I’m not sure it does. Oil companies say they’re green. Car companies say they’re green. Politicians say they’re green. That makes me suspicious. (Hey, we’re going to build green power and a hydrogen highway…while we sell China as much coal as they can burn).

    Does the tactic of saying “the debate is over” work so well?

    And Monica, try to understand – I’m not denying global warming. I’m using the arguments over it as an example.

    Dingus:

    I’m not arguing that one side doesn’t have to concede. I’m saying that the concession should be based on logic and truth. You provide a good example: Whitebear says a 5.9% decline doesn’t scare him. You point out that 5.9% is huge, and challenge his perspective. Your argument has merit. If I can recognize that, believe me, so can other people.

    Anonymous just says “Sorry dude, your opinion is irrelevant. There is no debate” despite the fact that people can disagree with him from several extremes (the meltdown isn’t a meltdown, the meltdown is real, but we’re very close to the bottom, the meltdown is real, we aren’t close to the bottom, and its been underway for months already).

    And seriously, Dingus, think about this: you shut down debate by dismissing the other side and what happens? Everyone agrees that something is evil, because disagreement doesn’t pay, and nobody does anything about the problem. Why? Because the debate wasn’t really settled and people didn’t really buy in. Who’s really pretending?

  107. ObserverX

    Rob,

    If you don’t like the the FTB as the example, then just change it to someone who owns a home and is asking you whether it’s a good time to take out a home equity loan to invest in a second property. Same considerations arise.

    Your suggestion that you can’t avoid the ethical dilemna by claiming ignorance only makes the point that the dilemna exists!!! (Yes, that one deserved three exclamation points.)

  108. CC

    Rob,

    Sometimes I think you pursue an argument simply because you like to argue. Do you really believe what you are writing?

    The debate that significant climate change is occurring and is influenced by human behaviour is over, just like the debate that smoking causes cancer, rain is wet and the sun is the centre of the solar system.

    At this juncture – given the almost unlimited capacity of people to delude themselves that everything is ok and they don’t have to do anything – merely suggesting there is still a debate about the existence of human caused global warming is irresponsible. It now falls into the same category as arguments about the inherent superiority of the Aryan race.

    Arguments that ‘we all have a vested interest’ border on the absurd. Yes, I have a vested interest in ensuring climate change doesn’t destroy my environment. But the ‘scientist that is working for a foundation funded by large oil companies’ has an entirely different vested interest.

    The tactic of saying the debate is over allows us to move on and apply our resources to the questions of “what effects do we need to worry about” and
    “what must we do about it.” Also, “closing” the debate focusses people’s minds on the relevant questions (to the extent that they can be focussed). Whether we have or will succeed in actually changing people’s behaviour is, of course, an entirely different question.

    So, even if your arguments are simply an “example”, they are specious and potentially harmful.

  109. albatrox

    Rob,
    Do you have some insight as to what involves a US real estate purchase for a canadian resident (taxes, paperwork etc.)
    For example , you are canadian, live in Vancouver and want to buy a property in Seattle.
    thankx

  110. coco

    Canadian Trade surplus shrinks to nine-year low

    http://tinyurl.com/2cz8qn

    (High dollar takes its toll on our U.S. exports)

  111. coco

    CIBC takes $463-million hit from U.S. housing exposure

    http://tinyurl.com/28urxm

  112. coco

    Visa windfall for four Canadian banks

    http://tinyurl.com/yttbjw

    (One time gain will help CIBC this quarter, but not if they have more write downs next quarter)

  113. coco

    More U.S. subprime fallout

    Wachovia warns of $1.1 billion of credit losses

    http://tinyurl.com/33sor4

  114. coco

    Link to Stats Can….(more detailed)

    Canadian international merchandise trade September 2007

    Canada’s trade balance with the world contracted to its lowest level since December 1998, as exports declined and imports increased

    http://tinyurl.com/2xxrry

  115. coco

    76% of Canadian Exports go to the U.S.
    (used to be 85%)

    17% of Canadian Exports go to China

  116. AmPa

    The housing market in Vancouver is sure as hell not predictable.

    What is predictable though is the reaction of a certain small subset of people leaving in Vancouver that post on the RE forums and blogs, namely the web-surfing arm-chair would-be RE investors/ultra bears.

    Here is summary of their comments ever since 2003:

    September to December: Sales are slow, inventory is going up, prices are are not increasing as fast, but that’s only because desperate sellers are rushing out. My uncle says its the end of the world. The market in Miami sucks.

    January to May: Sales are picking up, inventory is going up, prices are going up faster. That can only mean the end of the boom cycle. I was standing in line and one guy said the party for this RE market is over, and my cousin’s realtor says he has had trouble selling a condo.

    May to August: Price increase were in the double digit percentage points. That only means the RE market this year went up WAY too fast, and the higher it goes the more it must come down. The end is certain, 50% corrections coming up. Just wait and see that in the Spring of next year the RE owners will be crying.

  117. chip

    “I mean, we all live here, and if global warming is caused by us and is the biggest threat ever, we have a vested interest in reversing it regardless of where we stand, right?”

    Rob, the only reason you would state global warming is the biggest threat ever is if you’re getting your information from a demagogic former politician. And that’s not a good idea really.

    And if you truly wanted to do something about it, rather than put your moral vanity on display, you wouldn’t be employed in an industry with such a massive carbon footprint.

  118. Anonymous

    Good article in Vanity Fair that goes into the roots of the current disaster.

    The Economic Consequences of Mr. Bush

    “…1.7 million Americans are expected to lose their homes in the months ahead. For many, this will mean the beginning of a downward spiral into poverty…”

  119. Anonymous

    AmPa:

    Straw men are so easy to knock down aren’t they?

  120. /dev/null

    coco said: “17% of Canadian Exports go to China”

    Ya, but for how much longer?

    http://tinyurl.com/226cx3

  121. Annon

    Our security exchange should investigate CIBC. Months ago CIBC kept saying they have no exposure to subprime and that their portfolio is balanced. Then without any warnings, loss suddenly came. This is fraudulent accounting and unfair to share holders. It’s all too common. Lets yank out all those executives responsible for such fraud.

  122. blueskies

    that post on the RE forums and blogs, namely the web-surfing arm-chair would-be RE investors/ultra bears.

    same could be said for bears in California, Florida, Las Vegas and Phoenix and we all know what happened there… the bears were right.

    Vancouver is not immune.
    Direction is down, magnitude is unknown
    but my armchair is quite comfy.

  123. coco

    Annon,

    The problem with subprime slime is even the best analysts can’t forecast what the total losses will be.

    Today it is “X” amount, but by the time a bank reports their earns there is an additional amount of homes that have gone into foreclosure which effects the CDO’s/subprime exposed commercial paper, etc.

    We see bank after bank, brokerage firm after brokerage firm, etc. revising losses because of this.

  124. Anonymous

    coco:

    I think his point is there’s a big difference between “We have some exposure, we think it’s very small.”, to, “We have zero exposure.”

    One could be called an, ‘inaccurate assessment’, the other is an outright lie.

  125. coco

    150,000 jobs at stake because of loonie’s rise: economist

    http://tinyurl.com/2hk954

  126. coco

    The flip side to a high Canadian dollar….Canadian exports weaken and the U.S. exports strengthen.

    In September, US exports grew 1.1% to $140.15 billion

  127. coco

    Anonymous,

    I agree. A lot of Canadian banks lied about their subprime exposure. Maybe it was wishful thinking that they wouldn’t have a loss? Usually goes from zero, to minimal, to nominal, to……………..????? Seems to be the trend.

  128. Annon

    coco,

    Some 400+ million loss isn’t a small loss. And I would like to believe a bank like CIBC (with so many finance geeks and expensive executives) should have at least been able to provide possible loss forecast instead of saying “we have very limited exposure and that they do not see any impact that would affect CIBC’s profit materially” Indeed, this is just unacceptable and to me it sounds like accounting scheme that many big companies do to postpone loss reporting so that some insiders can sell their shares until they can no longer hold back the bad news.

  129. robchipman

    Annon/coco:

    Wouldn’t it be interesting to se the amount written down/written off by various banks and their bottom line for 2006? I mean, if the bank makes $4 billion and writes of $1 million, who really cares? Mind you, if the two numbers are closer…. It would put some meat on the bones.

    dev/null/

    Like you, I love intelligent design. I mean, evolution? Get serious. Are you telling me some woodpecker a million (wait, I mean 4,000) years ago put up with migraines because he knew, that given time, his descendants would develop some sort of liquid filled sac to absorb the shock? C’mon.

    Now, getting back to the realm of the serious, are you going to tell me with a straight face that the debate is over? How do you define over? You agree with scienctists while a sizeable, influential and mobilized portion of the US population doesn’t agree? Those guys don’t agree.

    You and I may write them off as crazy, or we may recognize that they put more store in faith than in science, but we’d be nuts to think that they’re completely ureasonable (after all, they’re allowed to have kids, drive cars, vote, serve on juries and administer their own affairs), are on the payroll of, what, Big Religion, or agree thta the debate is over.

    In other words, in terms of intelligent design itself, as a theory? I don’t believe it. In terms of whether the intelligent design/evolution debate is over I have to say: no, its not over.

    (Here’s some added dynamite: the law says a fetus has no rights, and must make the transition to “born live” to have any rights. Works great for abortion, if you’re pro-choice. Its terrible if you’re pro-the other choice. The new issue is: what happens if a pregant woman is killed? Its obviously a crime against the woman, but is there a second crime against the fetus? Right now, in Canada, no, because of the “born live” requirement. Do we agree that the debate over fetal rights is over? Decided? Done? I’m thinking its just getting into round 8. I’m also pretty sure someone will write in to inform me that the debate is, indeed, over).

    Chip:

    You’re getting in a little late (or throwing me a lob – if the latter, thanks). I used the word “if” to demonstrate that if Monica thinks that GW is the greatest threat ever, then its in all of our vested interests to solve it, and so the criticism that her opponents have vested interests is a weak one.

    The fact that you refer to some obscure former politician indicates to me that you think he may have a vested interest in GW, and for less than laudable reasons. (Its been working pretty well for him so far, but if he’s going to run for President he better throw his hat in the ring pretty soon. Remember when he and his wife were smashing rock and roll records?)

    Albatrox:

    Sorry, can’t help you. I’ve never bought anything in the States. I do know that the IRS is pretty strict.

    CC:

    Of course I like to argue. This whole thread is about acceptable ways to argue. I don’t think you should use hyperbole and then deny it, and I don’t think you should do what you criticise other people for doing.

    In your example you and the scientist have a common interest, and you’re saying he also has a specific interest that he prefers over your common interest. That’s a fair and arguable point, but its not the one Monica (and many others) make.

    Your claim that the tactic of saying the debate is over confers concrete benefits is a great one. You’re recognizing that its a tactic (rather than a fact), and I agree with you. Before you disagree or say I’m putting words in your mouth, notice that you haven’t argued that everyone agrees. You’ve argued that using the tactic of claiming everyone agrees allows us to move forward.

    That could be valid, but I’d argue that we aren’t moveing forward. There’s an old saying from the Spanish Empire: “I obey, but I do not comply” . That allowed people far from the King to say they were doing the King’s bidding, but in fact do whatever the Hell they wanted.

    Let me take a flyer here: George Bush/Stephen Harper say global warming is a huge issue and that we have to take action. Do you think that they are actually going to do it? Are you confident that now that the tactic of saying the debate is over has been invoked that Bush/Harper/any other usual suspects actually agree with, say, David Suzuki and are ready to take real action? (I know that I’ve heard rumours that Stephen Harper isn’t really green, perish the thought).

    The point is that I don’t think the tactic is very effective unless the goal is shutting down debate, and I thik that’s the case regardless of subject (US real estate/global warming/fetal rights).

    ObservrX:

    You’re faced with the same problem. You define my interest as a Realtor as being in conflict with my interests as a RE investment advisor. Its no surprise that you can’t see an alternative.

    If someone asks me if they should take out a home equity loan to buy an invesment property I show them the metrics, I explain what we think good metrics are, I show them what prices have done, and what the market has done since 1980. If they’re convinced that capital appreciation will bail them out of any mistakes, we talk about it, frankly. And, we talk about alternatives.

    If they decide to not buy a Vancouver income property I can still sell them something somewhere else. I can still sell them something in a year, or two years. I can not sell them anything, and watch them go buy Lululemon.

    The point is: I see creating a long term client as being in my interest, not making a fast sale at the cost of a long term, many sale relationship. You see an inherent conflict because you think that the short term gain is more important than the long term gain.

  130. coco

    The words are Double Chocolate Fudge Accounting. Sometimes they even put whipped cream, sprinkles and a cherry on top like Enron.

  131. coco

    “I mean, if the bank makes $4 billion and writes of $1 million, who really cares?”

    Rob, when a bank has to write off profit there is less money available for loans. If companies can’t get financing this effects jobs. If consumers can’t get loans this effects spending. The bank can only bear “X” amount of write offs, after that it will effect corporations and individuals. This is otherwise known as the “credit crunch”

  132. robchipman

    Coco:

    Yeah, I get that. But for a lot of people the numbers start losing significance, and even if they don’t, a credit crunch sparked by a $1 million loss in a $40 billion bottom line isn’t as big as one sparked by a $15 billion loss.

  133. coco

    Rob,

    I agree with you. But…the problem with this subprime slime is noone knows what the final losses will be or how long this will last.

    Canadian banks could come out smelling like a rose or something else. You just never know until it is over. National bank will take a good hit though.

  134. coco

    You have to consider a banks reinvest profits into other investments, loans, etc.

    Most people are not aware if there was a run on a Canadian bank, it wouldn’t make it through the day, not enough cash.

  135. ObserverX

    “You see an inherent conflict because you think that the short term gain is more important than the long term gain.”

    Putting words in other people’s mouths again?? I’ve never said (nor would I ever suggest) the short term gain is more important — my point is simply that a conflict exists because there is the *potential* for a Realtor to view the short term gain as more important.

  136. dingus

    National and BMO have been the only ones to make any mention of exposure to the ABCP debacle. National reserved a big chunk of change to buy back its own paper — probably hoping that would comfort holders and provide some marketability of their paper. BMO as far as I know hasn’t gone that far, but has at least disclosed some exposure thoug I don’t think they’ve booked liabilities yet. Analysts noticed that CIBC was moving funds around a month or so ago in a manner that suggested it was getting ready to take a hit. Now we know.

  137. dingus

    “Now, getting back to the realm of the serious, are you going to tell me with a straight face that the debate is over? How do you define over? You agree with scienctists while a sizeable, influential and mobilized portion of the US population doesn’t agree? Those guys don’t agree. ”

    Oy. Different. Whether intelligent design or evolution is “true” doesn’t really mean much for guiding behaviour, which is what the global warming / economic “carnage” foofurraw is about.

    I think the disconnect here is you seem to be saying that the “debate is over” crowd is forcing a version of the truth when all the facts aren’t in. And all the facts aren’t in because some people hold different views. This is either disingenuous or a mistaken view of the issue.

    The issue for the “debate is over” crowd is “does the evidence and argument around x issue meet a threshhold that it should inform specific activity?” With GW, I’d say the evidence and argument is such that it is highly likely that there is a significant risk that doing nothing will be disastrous. With RE, I’d say that the macroeconomic indicators and other fundamentals suggest that buying now is highly likely to result in paying substantial amounts for a sizable asset that is going to decrease in value. With GW the implications are general — activity must happen ant the societal level. With RE, the action is individual. My decision not to buy is based on the issue as I put it above.

    On the “debate is never over” issue, put it this way. You own a factory that is discharging toxic sludge into a fish bearing stream. You seek a variety of legal opinions about the advisability and consequences of permitting this to continue. You get opinions from a dozen of the best, most expensive lawyers in town who tell you that you will most likely be charged and convicted and face stiff fines.

    You also get an opinion from an ambulance chasing alcoholic who works out of his basement who refers to a case in PEI or NWT where a factory owner avoided legal consequences. Then you read something on the net written by scientists from Sludgeco Inc. that says that pollution is actually good for fish.

    Now. What should you do?

    Do you say to yourself, well, the debate rages, people don’t agree, I may as well keep on keeping on? Or do you say, gee, there’s a substantial risk that there are significant consequences to not changing my behaviour, I better do something?

  138. Strataman

    Damn stupid internet, trying to find a real-estate blog keep hitting a philosophy of the human species monkey discussion…anybody else seeing this virus?

  139. dingus

    Sorry about that.

    The US is down 5.9%. Even the most optimistic observers say this is just the beginning.

    Discuss.

  140. robchipman

    Dingus:

    Obviously you get it, but you’re spinning it a tad. The GW example is just that – an example. I haven’t said that GW isn’t real, or that it isn’t serious, or that the facts don’t support a call to action. I’ve said that some people who aren’t paid spin-meisters for big oil don’t buy the story, that not all of them publicise their views, and that their actions (or lack of) speak louder than words.

    I’ve also said that shutting down debate essentially ends the possibility that you’ll get any doubters/ deniers /disagree-er’s to buy into a solution, and so the tactic turns out to be (and this is just my opinion) nowhere near as effective as some think. Its like a salesman who blames the prospect for not buying, but refuses to see any weakness in the presentation or product.

    GW, compared to RE, is pretty simple. The original claim was that even the most optimistic observers admit that the carnage has just begun. That claim exists purely to discredit someone else’s position. The claim itself is arguably false. Starting at this blog and you can find intelligent people who don;t agree with that position.

    The reason is that the state of US real estate is nowhere near as clear as GW. Some (admittedly few) say its not a problem, others say you have to pick your spots, some say its just beginning, and others say its well underway. Its a quibble to pick on Anonymous for making an exaggerated claim, I agree, but he could have admitted the exaggeration, and he criticises other posters for doing less than what he does.

    There are times when the debate is over, for all intents and purposes, among reasonable people. There are times when the claim that the debate is over is false. I think we can both agree on that.

    You write “With GW, I’d say the evidence and argument is such that it is highly likely that there is a significant risk that doing nothing will be disastrous. ” I have to agree. Maybe I’m grossly misinformed, but I’ve read articles that claim the increased temperatures will be beneficial, and other articles that recommend spending our resources on other things (malaria reduction, for example). Just last night on The Hour there was a snippet about the guy who founded the Weather Network coming out as a denier. And of course there’s the whole idea that a scientific debate/fact has to be settled by politicians. I don’t have to be a denier myself to see something positively Middle Aged about that. One the one hand I see people who say “Wait, I don’t agree!” and on the other I see people saying “Maybe we should pass a law against not agreeing with this”. Even if you buy GW its got to make you wonder. Can’t we use reason and persuasion? Do we need to use the stick?

    BTW, do you see many people actually making substantial changes to their behaviours in light of this settled debate? Do the majority walk the walk or just talk the talk?

    In your example of the fish, the sludge and the alcoholic lawyer, I’d probably just look at the sludge I was pumping out and conclude that I didn’t need legal advice. I don’t throw garbage out the window now. But with US RE, GW and fetal rights, you don’t need an alcoholic ambulance chaser or an obscure website to find dissenting views. Its all in the mainstream press from a bunch of sources.

    ObserverX:

    If you mean that some Realtors may value the short term gain over the long term gain, then you are absolutely right. I’ve said before that its important to be very choosy with Realtors.

    I was under the impression you were saying that its in my interest to do that, when clearly its not. Repeat business and long term clients make my business work. I face a challenge similar to what you describe whenever I sell a long term holder these days. Its not always obvious that a good trade should be made, and sometimes its obvious that the seller should leave the market (and I’ve described that before). I don’t recommend courses of action for them that result in short term gain for me to their detriment.

    I took a quick look back at your original comment (hoping that you were pointing directly at me, and not at Realtors in general). My error. You were pointing at Realtors in general (although they don’t usually give investment advice, as the LV link also argued) and not me. There is clearly a potential conflict between the long term interests of the client and the short term interests of the agent if the agent sacrifices the clients interests (which is unethical by definition). I won’t deny it happens, but I don’t do it.

    To cut myself some slack, you wrote “My beef with Rob is that he speaks as if someone can simultaneously fulfill the dual roles of Realtor and RE Investment Advisor which in my view is unethical because in most situations, there is an inherent conflict of interest”.

    I think “someone” can, because I do, but you’re right that in most situations there is certianly the potential for conflict. Your description of subsequent potential conflicts involved me, however, and the advice that I would give. The description of that advice was wrong in that I wouldn’t give it. When you put me in the picture and posited the conflict I just couldn’t agree, because my interests aren’t as you describe. I spend too much on client relations to sacrifice them for a quick deal.

    Coco:

    C’mon! You find all kinds of info all the time! Banks are reporting what they write down. I’ll try to dig a little up. Some of the numbers are sobering.

  141. Anonymous

    So Rob if I have $1MM what can I do in Vancouver RE in terms of cap rates, rates of return and internal rates of return? I would be especially interested in the IRR.

  142. Tony Danza

    Sorry the above post is me, Tony.

  143. Domus

    ……anybody has the numbers for the past 3 days?

    I thought that was still the main attraction over here.

    Don’t mean to be brutal (usual acknowledgments to Rob for his hard work and commitment applies), but what are we talking about lately? RE sales in Vancouver or the state of the world?

  144. Annon

    well, this daily RE talk has been just pointless back and forth. No bulls or bears can establish a real trend of the market yet. So while still observing the numbers as they are released by Rob, why not entertain ourself with some different topics? At least a few readers here didn’t seem to mind at all.

  145. dyugle

    Two articles on global warming.
    The truth is we do not know enough about it to prove any links. Unfortunately when the proof is in it will be too late to do anything about it. The first article shows that there is a huge level of uncertainty with the current models (100% for the next 20 years then dropping to 60% before rising back to 100%). This level of uncertainty does not give me any confidence in the models.
    http://www.realclimate.org/index.php/archives/2007/07/friday-roundup/
    The next article shows how wrong the scientists can be when predicting the weather
    http://sweetness-light.com/archive/newsweeks-1975-article-about-the-coming-ice-age

  146. -A-

    why not entertain ourself with some different topics? At least a few readers here didn’t seem to mind at all.

    I think psycho Rob and his dogs are quite entertaining just the way they are.

  147. blueskies

    actually if the numbers are bearish they take longer to publish…..

    they are lightly sauteed in a red wine reduction sauce…… and then served to the public

  148. paulb

    Good point Annon. So Amero? Is it coming?

  149. AmPa

    Rob, are sales slow these days?

    As a realtor, how on earth do you get time to spend so much time reading and replying to all these comments?? Very admirable efficiency.

  150. blueskies

    the blog was probably originally meant as a marketing tool, but the bears captured it and now Rob spends a lot of time defending his honour and dignity, and putting out fires…

    makes for a hilarious read at times 🙂

  151. Markets are cyclical, housing is a market

    Lets talk about Robs sex life.

  152. -A-

    blueskies
    November 9th, 2007 at 8:50 pm
    the blog was probably originally meant as a marketing tool, but the bears captured it and now Rob spends a lot of time defending his honour and dignity, and putting out fires…

    makes for a hilarious read at times

    Oh please Blue! You have to have honour and dignity to defend it.

  153. Coco,

    ‘17% of Canadian Exports go to China’

    Actually, it’s not even close to that. I think your source is incorrect. We have been talking about this @ RE talks, check it:

    http://www40.statcan.ca/l01/cst01/gblec02a.htm

    China doesn’t even get mentioned, yet, amalgamated in with ‘other countries’.

    China may be gaining, but check out how the USA just dominates our exports. If US exports decreases by about 3%, that is probably about equal to all of Canada’s exports to China.

    another ref., indicating exports to China are about $10 billion/year:
    http://tinyurl.com/yw3b73

  154. -A-

    I just love the predictability of this devious /realtor sociopath clown. The more the insults, the more determined to keep posting the numbers.

    Nuts I tell yah.

  155. dingus

    A, man. C’mon, you’ll queer the deal.

  156. tqn

    “I think psycho Rob and his dogs are quite entertaining just the way they are.”
    “I just love the predictability of this devious /realtor sociopath clown. The more the insults, the more determined to keep posting the numbers.”
    now I understand why you are a “psycho” student in a “psycho” class and angry about the Van RE stage. If you watch those thriller movies, those who are angry and envy the world, and always talk about the “psysho” thingy ended up in a mental hospital. Sad!

  157. News Flash

    -A-:

    I guess after making a fool of yourself on this blog by trying to discuss real estate you have now resorted to just insulting all those who engage in real discussions.

    Try not to be so bitter towards those who have been more successful in life. For a society to succeed we need people such as yourself to pay off our mortgages and serve our lattes. And I thank you for that. Just try to stick to discussing real estate or what ever the topic is. Your drivel is getting extremely boring.

  158. Domus

    I think it is wrong insulting the host, whatever your opinion. Do not subscribe to the comments above.

    Back to RE and the BBC article about the US:

    “Mr Zandi says there are three factors that have caused the property crash:

    * speculative purchase of homes in hot areas by investors who intended to “flip” them, reselling quickly at a profit;

    * the availability of easy credit, where mortgages were granted to people who could not really afford them;

    * and the over-supply of new houses by builders.”

    Do we miss any of the three ingredients above in Vancouver? I think, actually, that on top of that we have a real shortage of good jobs and productive activity. Vancouver is a services town full of older people: just go to a supermarket on a Tuesday morning…..

  159. Disbelief

    Those three things are the root of what has happened here over the last few years. If that is what causes crashes then add to that 40 year morts and no money down. We are heading for a crash to the likes we have never seen . This is far from paradise in Vancouver we have 2 seasons cool and wet and cold and wet. We are and have been used as a ploy for rich foreigners to make money when they ceases to happen they will toss us like yesterdays news. Word gets out fast when they hear you can build 500 sq. ft shoebox and sell for 500k. And these idiots line up around the block. Scary times……

  160. Jeff

    Disbelief, 500 sqft rarely sells that high, maybe $350k… but 500 sqft fundamentally might be worth $125k ($250 per sqft)… so I guess those properties have about 65% to fall.

    I have stated on this site before that a 50% correction is most likely in the cards.

    Caution people.

  161. blueskies

    http://tinyurl.com/2x6clg

    from the Vancouver Sun today

    “Quietly, below the radar screen, the number of bankruptcies in Canada is rising,” CIBC economist Benjamin Tal noted…….And they are likely to rise even faster further down the road, it warned

  162. Jeff

    Who is going to buy property in Canada? And what about the rush for the exits to free-up Canadian $’s to buy south of the border?
    http://www.thestar.com/Business/article/275269

  163. -A-

    I was wrong, and I will admit to it.

    I thought that Van Real would be the first dog to come to Rob’s defense, but it turned out to be Aaron.

  164. -A-

    oops !I was wrong again, dog 1 was the first to come to Rob’s defense.

  165. paulb

    -A-

    if it’s so terrible here on Rob’s board go somewhere else.

  166. Skeptic

    Do not feed the troll…

  167. Domus

    Poll time

    If we say that average prices of average home are 100 today, what will they be in Nov 2008?

    I say 96.

  168. tqn

    Skeptic,
    no need to feed the troll, but we need to guide the lonely soul to the place it’s meant to be…Here, let talk about RE.

  169. tqn

    “I have stated on this site before that a 50% correction is most likely in the cards.”
    And what would you tell your clients if they ask you the status of the market? Are you gonna be an honest realtor or an “used-car salesman” realtor?

    Domus,
    I would say 108.76 – and in case you are curious where that number came from, it was from my 4 years old girl.

  170. Jeff

    I refrain from sharing my opinion on the market with my clients. I tell them that the direction of the market is anyones guess. I tell them that Realtors are great for having the buyer and seller meet (the benefit of listing), for the creation of a legally enforceable contract of purchase and sale, and for arranging showings and narrowing choices that meet their desired specifications.

  171. Jesse

    it’s very wrong to insult anybody here.

  172. News Flash

    “If we say that average prices of average home are 100 today, what will they be in Nov 2008?”

    My guess is about 110.

    Who know November 2008 could finally be the peak the bears have been looking for all these years. With the new US president starting in Jan 2009 that is likely the soonest we will see interest rates start to rise again. Until then the party is still on.

  173. Jeff

    I got a newsflash…
    1. Mortgage rates are rising in Canada.
    2. The US housing market is tanking.

    Please explain your point News Flash.

  174. Strataman

    http://tinyurl.com/34l35l

    Don’t keep your day job realitors advised.

  175. Strataman

    My guess is 75 in Nov 2008, 50 in Nov 2009. In May of 2009 we will have an NDP Government as the liberals will be in major deficit, and angry homeowners will turf them for spite if nothing else! 🙂

  176. Strataman

    Mighty Manhattan Condo’s can’t make their MAINTENANCE fees!
    http://tinyurl.com/yquxww

  177. Geezer

    Jeff wrote, regarding the US housing market:
    “wow… big trouble coming…”

    Did you notice one interesting line buried in this otherwise very bearish post? It referred to a recent condo sale and it said:

    “Ironically, one of the few people who bought one of his $1m apartments was a director of the World Bank”

    He apparently drove a hard bargain but he has bought into a depressed market. I wonder what he knows that we don’t, or is this just a case of the “smart money” being dumber than our clever bears?

    Srataman wrote, regarding Southern California:

    “Don’t keep your day job realtors advised.”

    If you’ve been in it for five or six years and are barely making a living, you might want to think about what you were doing before and get back into it — you can come back in a couple of years,” Sands told members of the California Assn. of Realtors meeting in Universal City.

    In the short term, the local real estate market “is not going to get better,” Sands said.

    For a market that is currently in the toilet that sounds like good advice.

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