Wednesday and Thursday Numbers

There were 91 new listings today, and 103 sales, for a sell/list of 113.19%. Inventory dropped below 10k, to 9,884, with over 90s hitting 2,740, or 27.72%.  That number is getting higher, and that’s significant, I think, but don’t expect serious price movement until its higher both percentage wise and in absolute terms.

Wednesday there were 108 new listings and 86 sales, for a sell/list of 79.62%

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206 Comments

Filed under Daily Numbers

206 responses to “Wednesday and Thursday Numbers

  1. blueskies

    after Dec 15 sales # will drop off

  2. Strataman

    I would guess (correct me if you will) that the balance of this month will be much the same. Personally I would look for a new year trend a bit earlier then usual though, I think we may see some unusual January inventory climb by the 15th. If we don’t I would say the bull market is continuing. My reasoning is a real top would lead to more then normal Jan listings, a false top would mean listings will stagnate till April. If we’ve topped I would expect 12000 by Feb 5th if not we’ll have another bull spring!

  3. blueskies

    strataman:
    the market volatility between now and year end should wake up a few people….OK we’re getting out!… big spring bounce…inventory wise

  4. Dobos

    Re: what do the numbers mean?

    I see this question asked almost everday!

    Read Them- they tell you

    what I have noticed is declining inventory over the past few weeks-

    A) Even sellers know this aint the best time to sell
    IMO the declining inventory may be a compounded with declining pricesmarket/- sellers may be holding off till spring, for the rebound,

    I have also noticed the rising over 90’s % if your house is overpriced- it aint gonna sell in this market.

  5. $fromA$ia

    Blue skies, although I agree with your take on the market, be carefull that your comments don’t sound like wishfull thinking. 🙂

  6. -A-

    Re: what do the numbers mean?

    The numbers also mean that the pool of greater fools is truly diminishing.

    Fewer listings, less inventory, and yet overpriced listings aren’t selling.

    One day soon it will be as if somebody turned off the tap.

    Not much demand left from specuvestors or first time buyers.

  7. Snick

    Interesting info tidbit…

    Google Robert Campbell’s “Timing the Real Estate Market” and scroll down to the “preview” part at the bottom of the page. An interesting and sensible read.

    Looks like “Stage 3” is over for Vancouver.

    Let “Stage 4” begin! Wheeeeeeeeeee!

  8. blueskies

    be carefull that your comments don’t sound like wishfull thinking.

    i long for the days when Yaletown prices were $250 sq./ft. but nostalgia ain’t what it used to be so i’ll have to settle for a 50% haircut.

  9. -A-

    Anybody see good growth potential in Vancouver for credit “repair” and counseling?

    Construction workers and realtor re-training ?

  10. blueskies

    the construction workers will head to greener pastures and the former realtors will have day parole.

  11. AmPa

    Aw, my happy little renters. How I do love you! So cute when you talk about real estate.

  12. coco

    Canada industrial capacity use drops in 3rd-qtr

    http://tinyurl.com/yrsls4

  13. Anonymous

    Transat earnings fall 44% due to commercial paper writedown

    Transat A.T. Inc. says its fourth-quarter profit dropped to $7.7 million from a year-earlier $13.6 million after one-time charges, including a loss provision for asset-back commercial paper.

  14. coco

    U.S. Online Sales Growth Slows Amid Holiday Slump

    http://tinyurl.com/239p9t

  15. coco

    “US inflation rose at its fastest pace in two years during November, spurred by higher energy prices, according to figures from the Labor Department.
    Consumer prices rose by 0.8% in November, above forecasts, while core inflation, which strips out energy and food prices, rose 0.3% month-on-month.”

    “The rise in inflation comes at a time when economic growth in the world’s largest economy is slowing due to the housing slowdown and credit crisis.”

    “There are fears that as energy costs increase, consumers will have less money to spend, which could further hamper economic growth.”

  16. coco

    Twisting in the wind of bull/bear markets (Canada)

    http://tinyurl.com/2dphyj

  17. coco

    Diamond sales carry economic warning
    Harry Winston’s latest results undercut the notion that precious jewels are recession-proof

    Harry Winston, which recently changed its name from Aber Diamond Corp., owns 40 per cent of Diavik, while British industry giant Rio Tinto PLC owns the remaining 60 per cent, and operates the mine.

    http://tinyurl.com/ysbq29

  18. coco

    Greenspan Says Odds of Recession in U.S. Are `Clearly Rising’

    http://tinyurl.com/2a6edx

  19. coco

    For the first time, Calgary apartment rentals are the priciest among major Canadian cities, eclipsing even Vancouver.

    http://tinyurl.com/yuxnwn

  20. coco

    “As much as we would like to think otherwise, the “Canadian economy remains deeply intertwined with the United States. Americans buy more than three-quarters of what we export, accounting for nearly a quarter of gross domestic product. And the United States is now perilously close to recession. The risk is now near 50 per cent or better, according to many forecasters.”

  21. coco

    CIBC’s tightly guarded secret is the name of its U.S. financial guarantor on its subprime exposure.

    If it is one particular guarantor, which most people think it is…this guarantor is on the edge of bankruptcy.

    CIBC future subprime writedowns rumored to make their Enron losses look small.

  22. coco

    Bank of Montreal, Canada’s fourth- largest bank, said it’s still working on an “action plan” for its structured investment vehicles after Citigroup Inc. said it will rescue seven SIVs.

    Bank of Montreal’s Links Finance Corp. and Parkland Finance Corp. SIVs have total debt of about $21.2 billion.

    http://tinyurl.com/22c95f

  23. Dyugle

    Neat comment about the FED on Mish’s site.
    “Note the Fed’s admission that they can “not directly address the balance sheet or capital constraints facing financial institutions” nor can they “directly reduce the perceived risk in exposure to other financial counterparties”. Those are arguably the only candid statements of fact the Fed has made in years, but ironically enough, they are the only Fed statements that everyone refuses to believe.”
    http://globaleconomicanalysis.blogspot.com/

  24. coco

    Interfor’s mill in New Westminster closed indefinitely.

    Employees of mill, which did not open after summer strike, offered voluntary severance

    http://tinyurl.com/264oer

  25. Brian

    Jeff , Dude, Domus, Grin and Bear It:

    What makes Vancouver RE different is foreign investors. Theses guys don’t need a mortgage, don’t care about interest rates, and they tend to deal in cold cash!

    They are the ones who drive up real estate prices higher.

    I was in one of the latest developments in Coal Harbour and most of the buyers were from Asia or the Middle East.

  26. paulb

    All I see day after day is agents cancelling listings this time of year. Of course this is nothing new. I expect them to list earlier this year. Much higher inventory numbers for Jan- forward and price declines this May. Just a guess but we will see.

  27. Jeff

    Brian:
    You got me… I give up… Vancouver is the only place on earth where RE prices will continue to rise.
    Maybe I should buy that new Audi.

  28. Anonymous

    “What makes Vancouver RE different is foreign investors”

    Sounds familiar….. must be too young to remember all the Hong Kong investors pulling out in the past.

  29. blueskies

    is foreign investors. Theses guys don’t need a mortgage, don’t care about interest rates, and they tend to deal in cold cash!

    disingenuous bullshit!

  30. Anonymous

    I think there is a few twenty somethings on the blog who have never through a recession or have witnessed Asian investors selling out Vancouver property in the past like hot cakes.

    Those of us who are older and have lived through both…know differently.

  31. Anonymous

    that should be: never “lived” through a recession

  32. Wise Guy

    Brian,

    How old are you? 26?

    You have a LOT to learn.

  33. coco

    Greater Vancouver Real Board Average Price Graph
    January 1977 to November 2007

    http://tinyurl.com/2vw77u

  34. blueskies

    rich people bailing out…..

    selling at a loss…. buy high sell low

    http://tinyurl.com/2q4aap

  35. jesse

    “selling at a loss…. buy high sell low”

    Oh yeah. The pesky GST and agent fees…

  36. coco

    Canadian Credit Crunch worsens…BoC injects twice as much

    Bank of Canada injected C$960 million into markets on Friday to lower the overnight interest rate toward the central bank’s target and improve liquidity.

  37. robchipman

    I’ve been here a while, and been involved in selling to and for Asian investors for a while. When I read things like “…witnessed Asian investors selling out Vancouver property in the past like hot cakes…” I have to ask the obvious:

    -How much does offshore investment fuel this market now, and how bad a hit did the market take when the Asian investors of the past sold off “…like hotcakes”? Specifically, when did it happen, and how much did the market drop? If experience is talking, let’s make the case based on some facts. I’m sure it will be edifying for everyone.

    Coco:

    I think the cash injections are the most under-appreciated news item around (despite the ink that they have received); if the CBs do resolve this (as some argue they will) it will be an historic moment.

  38. Annon

    Alan Greenspan admitted that his 1% policy created the bubble and stopped the dotcom crash from spreading too wide. He also said while huge losses were recorded and bankruptcies were soaring, but most people didn’t lose their jobs during that time. In that sense, he claimed the 1% policy was justifiable and was the only way out.

    Lets be clear on why house price (or anything else) is high. If people can not at least afford to finance, they can’t buy it and price couldn’t be high. So too much money/credit injected by central banks in the market is the true source of inflation. Not some bull’s argument about how strong the Canadian or global economy are or how special Canadian cities are. While many citizens have full faith on government’s promise to ensure affordable housing, the central banks are doing just the opposite. Many people would do lots of research to find the best price for their 50″ LCD TV and yet they would even consider today’s RE price without much hesitation.

    The true winners of this inflationary scheme by central banks are probably those CEOs and financial service providers and their employees. When credit contracts, who are left holding the bag?

  39. Annon

    Out of my 11 high school classmates who were from Taiwan in 1992, only 3 stayed in Canada today. Those that left all sold their Canadian assets before they left. Most of them left between 1997 and 2000. And this is consistent with what extended friends are seeing too. I can not provide numbers but this is enough for me to believe that Asian investors can pull funds and have some impact on the RE here.

  40. Anonymous

    The main drivers for bubbly RE prices are:
    1. Government
    – The gov’t need tax $ to pay for the olympic infra. High property value lead to high property tax.
    – The gov’t in part support the construction sector by injecting $ into infra. project.
    2. Easy credit
    – with 30 yr, 40yr mortgage instruments, ppl can now “afford” to buy higher price houses.
    – mortgage insurance, with it ppl can now “afford” to buy higher price houses.

    It’s just one big scam. The fact is that the real estate developers have too much influence on gov’t policy.

  41. coco

    Annon,

    When I bought in 1998 I looked at about 140 properties, a lot of the sellers were Asian, moving back to Asia and a lot of places were vacant. I bought a place that a older single white guy was living in who I thought was the owner, but when I made the offer…the owner was actually a gal in Hong Kong.

    I read 60% of properties in Vancouver between 1989 – 1997 were owned by Asian investors. I don’t think it is that high now.

  42. WoW

    A lot of Asian investors bought Nortel too.

  43. coco

    Seems there was a exodus of Immigrants after 1997 after all because of the Asian financial crisis.

    Jason Wong – Century 21 Vancouver realtor stated in a interview:

    “After 1997, a lot of Hong Kong immigrants returned to Hong Kong for investment opportunities. ** The Asian financial crisis had a downward effect on Vancouver real estate. ** People who needed to liquidate money fast, sold their houses cheaply. Stories that have been told, include a C$700,000 (RM1.9m) house in West side sold for C$300,000 (RM840,000).”

    “Unattractive economic environment created a dead pool in real estate. Nevertheless, real estate in Vancouver still grew over time until the 9/11 2001 World Trade Centre event. People feared that Vancouver might be the next target for a terrorist attack. House prices declined slightly but when Vancouver won the bid for the Winter Olympic Games 2010 and in tandem with a historical low interest rate, real estate value skyrocketed till now.”

    “After 1997, there was a big drop in Hong Kong, Taiwanese and Korean immigrants. However, more mainland Chinese have been coming ever since. Today, the majority of new immigrants are mainland Chinese.”

    If you wish to read the rest of the article
    http://tinyurl.com/2k3khf

  44. Annon

    Anonymous, easy credit = central banks inject more money to the market.

  45. Dibelief

    Today, the majority of new immigrants are mainland Chinese#

    I read 60% of properties in Vancouver between 1989 – 1997 were owned by Asian investors. I don’t think it is that high now.

    Asia is a continent that encompasses many countries some of which are very large in population (China, India, Vietnam, Thailand….) I think you might want to rethink that statement considering these are probably the largest investors in Real Estate and consequentially where we get most of our immigrants from.

  46. coco

    Dibelief,

    I said I don’t “think” it is that high.

    I have read various articles stating it is around 30% to 50%

    If you have the link to the exact percentage please post it.

  47. BOBBYBEAR

    Now these guys using a CMHC insured mortagage 40 year no downpayment no interest….these guys are in for the long haul…right? just like in the US right? Just because it looks similar ….must be coinincidence…right? ya…i figured that…we will have the Olympics and the massive debt that will go with it….they want this….and San Diego..there weather sucks compared to Vancouver right?…of course you can buy with 2.99 percent teaser from some builders….

    Just a woke up…had a bad dream…see ya

  48. Geezer

    Here’s an interesting article on why the US economy won’t go into a serious recession.

    http://tinyurl.com/2pcb2p

  49. blueskies

    …another Vancouver intangible:

    http://tinyurl.com/yo7bcm

  50. blueskies

    interesting article geezer:

    just goes to show that Van RE will fall w/o requiring any major market incidents….. a house of cards supported by hot air, any endogenous event can blow this over even with a strong economy and fairly good interest rates.

    We.Are.Toast!

  51. Disbelief

    I said I don’t “think” it is that high.

    That’s fine but I “think” that it’s much higher and another point I would like to make is that I think the specuvestors are mainly immigrants that have limited knowledge of Real estate as many of them have been under communist rule or so far on the other side of the earth have no idea of what can and will happen in time….

  52. Priced Out

    Is it fair to say that East Asians (Chinese and Koreans) are doing more speculation than other immigrant groups?

    My general impression is that many immigrants don’t speculate. Perhaps less so than third generation Canadians. I work with a lot of South Asian immigrants, and from what I’ve heard, there isn’t much talk about buying real estate. Sometimes it seems there is a cultural or religious or purely practical aversion to the kind of debt you need to get into to buy home in Vancouver.

  53. DeeDub

    …as many of them have been under communist rule…

    I think it’s a real stretch to suggest people coming from places like that are somehow unfamiliar with the nasty side of economic cycles…

  54. Annon

    I guess being a hero in movies is still proved to be much easier than in real life.

    http://www.nbc11.com/news/14858065/detail.html

  55. Domus

    Financial Times, main piece of today (Saturday morning, when investors sip their coffes)

    http://tinyurl.com/2g2j9t

    Uh, I forgot the title: “Buy-to-let financing in UK evaporates”.

    Of course, Vancouver is different: we should just read and feel sorry for them…that backwater of London.

  56. coco

    Consider the U.S. economy like an oil super tanker and the Fed like a small outboard motor. The Fed is trying to steer this huge tanker with this small outboard motor, whether it can change the direction of the tanker takes months to be seen.

    China is caught in between a rock and a hard place. They have threaten to sell off billions of dollars in U.S. treasuries they are holding and mentioned they want to expand their portfolio to include other currencies. U.S. has threaten trade protectionism if they do that. So, since the relation is on rocky ground already, I don’t think China will be investing more money into the U.S. anytime soon.

    Canada is the main supplier of oil to the U.S. more than any Arab country. Although lately there has been some Arab investing in the U.S.

    The US has the largest and most technologically powerful economy in the world, with a per capita GDP of $43,500. That is why all the central bankers are trying to rescue the U.S. economy from tipping into recession, because it will slow down global growth and/or tip other countries into an economic slowdown or recession too.

    No other countries, even the emerging economies like China and India have grown enough yet to pick up the slack if the U.S. slows.

  57. coco

    Disbelief,

    Although this graph is 2001, when you remove the Black, Latin american, Arabs off the graph, it would be about 44% .

    http://tinyurl.com/ynu4c7

    I will try to find something more recent from government sources when I have the time. I have seen several in the past.

  58. coco

    So, based on the graph above what percentage of the 44% would own real estate?

    Considering the following factors: several family members are together in one property, additional investment properties and people that don’t own.

    Still think it would be over 60%?

  59. ceejay

    must be the Catholics who are still buying, coco 🙂

    I’m with you and Rob on the CIBC thing. The markets are figuring it out too; canadian financial services equities are starting to mirror the US tank. However, its hard to bet on Canadian banks as longer term loosers. Just can’t see a bottom yet.

  60. blueskies

    good article domus

    a new year of tight credit who could have seen this coming?

  61. Domus

    …and one from the road from Bloomberg, about our very own Canadian credit crunch (this is from today’s main stories):

    http://tinyurl.com/2nnw3q

  62. Mightymouse

    Whoa!!! Anyone watching CNN Street Talk?

  63. I'll try to be nice

    Quite simple really, the world’s most influential central banker deliberately devalues it’s currency by about 40% against the Euro.

    The flood of paper money finds its way into the world economy as the U$ dollar is a world currency used to buy oil, gold and arms to list a few.

    Money its self is a commodity and as such the cost of money became very cheap because of the massive freshly printed supply.

    The net result is asset inflation, real estate, oil, gold, and any hard asset that can be used as storage of wealth.

    The strong medicine worked, but the side effects are just beginning to show up,
    Look out below.

    Can any of the realtors on this blog offer an alternative explanation?

    I didn’t think so.

    -A-

  64. WoW

    Rob – see the front page article in todays financial post? Specuvestors had better wake up (and hit the exits) asap.

  65. blueskies

    excellent article!

    quote from same:

    There are reports that appraisals on property, which are conducted in conjunction with a mortgage, are erring on the side of being more conservative.

    wake up call for people closing on pre-sales…will the bank ask for a bigger down payment …….

  66. WoW

    I expect lower appraisals, bigger down payments – and higher interest payments – as they say….game, set, match….

  67. $fromA$ia

    Shall I say it?….. Ok, Fellow Bears, you all have a decent argument that I agree with but theres nothing showing right now that supports the up comming doom and gloom prospect.

    Blue Skies, your not going to see 2002 prices back in Yaletown. The major reason why I say this is when CHMC introduced the 40 year ammortization.

    This is a very strong stick that CHMC has pitched their tent with.

    If you DOOM and gloomers say,” we’ll I think theres as much as a 20% correction on the horizon that will probably happen in the next 3-10 years”, then that sounds more rational and credible.

    Lets see some actual cracks in the market posted here.

  68. $fromA$ia

    Actual crack s in the local market.

  69. Domus

    I am no doom and glooomer: my analysis is based on fundamentals and my prediction is that we will see at least 20% down over the next 2 to 3 years. I would not be surprised to see more.

    Reasoning: sudden stop in appreciation together with more strict lending criteria. Pretty much what has happened in the US and UK. If you have reasons to believe here it is different than anywhere else, we go back to the question: why?

    Trust me there are immigrants to SF, NY and London as well. They are going down.

  70. blueskies

    If you DOOM and gloomers say:
    Actual crack s in the local market.

    1550 Barclay ….nuf said

  71. blueskies

    “rich immigrants et al” = straw man argument

    typical bull call, somewhat strident more recently!

  72. Jeff

    Where is money safe?
    Are GICs safe, how about cash in the bank?
    What does he mean “close out time deposits”?
    Schultz sees an apocalypse now
    Veteran editor declares ‘A financial tsunami is upon us’
    “recession, possibly depression; bank failures; exchange controls; housing prices down by 50%; credit card company failures; money market fund dangers; tripling of U.S. jobless numbers…”
    “Most urgent is close out time deposits, buy non-U.S. government bonds.”
    http://www.marketwatch.com/news/story/schultz-sees-apocalypse-now/story.aspx?guid=%7BB4657333-B68C-4A34-A493-266821FC09AB%7D

  73. $fromA$ia

    What is 1550 Barclay ? Blue Skies can you clarify.

    Also I’l like to abreviate your Blog Name but I wouldn’t want you to think that your full of it. I am in the same boat you are by the way.

  74. $fromA$ia

    I mean Blue Skies = B.S.

    Like I said we’re in the same boat, I don’t think your full of it.

  75. blueskies

    $ try bs for short 🙂

  76. $fromA$ia

    Domus, thanks for your input but sales through winter tells me theres nothing stopping it? ???

  77. blueskies

    according to strataman on vancouver condo info

    Condo Stagnation in Sales? I decided to track condo sales on two complexes 1550 Barclay, and Spectrum on a VOW at the first of December I had 59 units at Barclay listed, sales to date out of those 59 = 0, with Spectrum I had 36 at the beginning of December (the 1st) and now I have 5 sold. So my question to bulls, December is a terrible time TO SELL but how come buyers are not snapping these up?

  78. $fromA$ia

    Are there any ares that are still undervalued to the rest? Ex. Tsawassen?

  79. blueskies

    my opinion:

    everything is overvalued, the entire market is oversold…. you need to wait for a strong sign of a correction and find a vendor who has to sell at a discount….. avoid “falling knives”

  80. dyugle

    Look at the MLS stats for Port Moody detached homes. Either the stats are not worth the effort or there is your major crack. Price jumps to over 800K in July and has fallen back to 680K now. Look at White Rock and the price is jumping up and down month to month more violently than the stock market. There are more and more permits being issued yet when was the last time a development sold out prior to breaking ground. The days of milk and honey are over. Want some more cracks you do the leg work.

  81. WoW

    Ugly fuggly uggluly

  82. blueskies

    The days of milk and honey are over.

    correctomundo!! even ol’ rob who used to control this blog will tell you…. now is not the time to buy!

  83. $fromA$ia

    You mean exactamundo, Aurther Fonzarrelli.

  84. Disbelief

    I have noticed Rob being a little reserved lately. Answering questions with questions. I don’t think you will hear Rob or any other realtor saying now is not the time to buy. I have heard Rob say ” Now is a good time to buy if you are in for long term… ” The market at this time is very unsure at this time we will all have to wait and see and leave your garbage speculation be it bear or bull… Because until the inevitible happens it is just oral sewage.

  85. blueskies

    and leave your garbage speculation be it bear or bull….

    but…but i love speculation, it’s like gossip the life blood of society, what else is there to talk about if not for possessions

    what i refer to as blogfroth 🙂

  86. Strataman

    blueskies: “according to strataman” just to clarify my filter on the VOW is only looking at under $500,000 on Spectrum and Barclay. I suppose these would be units available to LOW end buyers! (Low end being a bit of sarcasm on my part)!

  87. Annon

    http://tinyurl.com/29h9kk

    key phrases below:
    ———————————————-
    “What is interesting, and potentially disturbing, is that the rest of the world doesn’t seem to think this is a big deal any more,” he said.

    Mr Roach said the US was the world’s biggest consumer economy at $US9.5 trillion, compared to China at $1 trillion and India at $650 billion.

    He said the key issue for economies outside the US was to determine how much internal demand of their own did they have to offset any shortfall from US consumers.

    “My conclusion is: not nearly as much as you would like,” Mr Roach said.
    ———————————-

  88. Annon

    I know, it’s yet another non-Canadian news…. but, but, but … it’s relevant IMO….

    http://tinyurl.com/2et62o

    key phrases:
    —————————————
    Manufacturers survey points to another Japanese recession
    —————————————

    And it’s also because of US recession risks. Hmm, seems like many are seeing US recession as a big thing.

  89. ceejay

    what are you saying, -A-…? RE prices are going up?
    When inflation hits and purchasing power erodes, interest rates will rise and the carrying cost for shelter will rise in tandem, and wages will not keep up. RE prices will stagnate at best and likely fall significantly as bubble price mortgages become unaffordable. I agree, gold may be OK, but RE – not.

  90. Domus

    $fromA$,

    I am frankly horrible at timing markets, I am the worst market timer in history as my last 2 years of contributions on this blog show. I thought Vancouver would be already in a downward trend by now.
    Does this make me wrong in predicting a major correction? Not at all: timing is impossible, but saying that a MAJOR correction will come is easy.
    All you have to do is look at people’s incomes, levels of appreciation in the past 3 years, what is happening to credit markets all over the world (including Canada, see ABCP commercial paper losses).

    I think we are in for an adjustment of historical proportion: do I know when? No. We could drift up a while longer, this market has surprised me before. But it will adjust: ever more strongly as it grows further. That I am s-u-r-e.

  91. Domus

    Jeff:

    here is the definition of time deposits

    http://en.wikipedia.org/wiki/Time_deposit

    They are like locked-in GIC: there is a date for redemption and the provider has often small-print rights to delay it (see all the funds that have been locked, for example the state-fund in Florida on a large scale).

    BTW, California is going to issue a budget emergency: no money in the coffers after the RE collapse and impossibility to raise at good rates through bonds (markets are seized). Question of the day: if California cannot raise, can a single first time buyer?

  92. Annon

    Interesting read on commodities.

    http://tinyurl.com/26ksh4

  93. Annon

    http://tinyurl.com/2fs45n

    Key points:
    ——————–
    America’s central bank has mismanaged the biggest risk of our times. Ever since the equity bubble began forming in the late 1990s, the Federal Reserve has been ignoring, if not condoning, excesses in asset markets.
    ——————–

  94. BOBBYBEAR

    the 1929 version of the credit bubble top?

  95. BOBBYBEAR

    if u had to pay cash for real estate…..many could only buy several dump truck loads of dirt

  96. Priced Out

    I think the crack is the all the hidden new condo inventory. By hidden, I mean its not on the MLS. Either developers or speculators are holding onto it but will have to bring it to market at some point (probably the Spring).

    The developers, and some speculators with deep pockets, will do what they have to unload the inventory if they get worried next year. No sentiment about “give away” the family home, just minimize the losses (or if they are lucky, keep some gains).

  97. Jeff

    I want to report that I sold 1 of those listing… about 90 days on the market, 1 price reduction, sold for 96% of the reduced list price.
    We finally got the first offer, the seller decided to “get out” because of the current RE climate. It was tenant occupied. She decided too much worry with the US market, soft Whistler market, and some other BC markets declining. Going to stay in cash.
    She also owns her condo (principal residence) and may sell in the spring if the decline and worry continues.

  98. blueskies

    the seller decided to “get out”

    also be interested in why the buyer wanted in…

  99. Disbelief

    With the hot market that it has been… The need for a realtor has been unnecessary… People have been able to sell with a homemede lawn sign. What about the FSBO stats how are they handled?

  100. Disbelief

    #

    …as many of them have been under communist rule…

    I think it’s a real stretch to suggest people coming from places like that are somehow unfamiliar with the nasty side of economic cycles…

    I think its a bit naive of you to think that someone sheltered from capitalism and how a free market system works is going to be able to grasp the concept. Having been here for under 10 years all they have to go on is that if you buy real estate you will make nothing but money. As anyone that has been here for more that a couple of decades know this is just not so. Unfortunately uneducated immigrants are going to learn the hard way…

  101. blueskies

    uneducated immigrants

    rich people don’t become rich by doing stupid things like buying RE at the height of the bubble.

    there will be no support for Van RE prices from that quarter.

  102. Jeff

    blueskies:
    It was bought in Sept 2002 for half the price. The seller owns 2 other properties.

  103. DeeDub

    I think its a bit naive of you to think that someone sheltered from capitalism…

    Living under communism doesn’t “shelter” anyone from capitalism. If anything it prepares them better because the same needs exist, only under conditions that are considerably less predictable and a hell of a lot harsher.

    Arguably growing up sheltered by western-style social capitalism is a disadvantage, as people’s ability to cope is rarely tested under fire. Economic “cycles” in the West are a cakewalk relative to the schizophrenic nature of economic cycles elsewhere.

  104. Domus

    Greenspan’s today on ABC:

    “In an interview on ABC’s “This Week with George Stephanopoulos,” Greenspan said low inflation was a major contributor to economic growth and prices must be held in check.

    “We are beginning to get not stagflation, but the early symptoms of it,” Greenspan said.

    “Fundamentally, inflation must be suppressed,” he added. “It’s critically important that the Federal Reserve is allowed politically to do what it has to do to suppress the inflation rates that I see emerging, not immediately, but clearly over the intermediate and longer-term period.”

    The U.S. central bank has lowered its benchmark interest rate three times since mid-September as a housing downturn, tightening credit conditions, and steep food and energy prices threaten to push the U.S. economy into recession.

    But cutting rates can have the unwanted side effect of pushing up prices, so the Fed finds itself in a tricky position of trying to revive growth without spurring inflation.

    Last week, U.S. data showed that wholesale inflation rose at the highest rate in 34 years, while consumer prices rose the most in more than two years.

    Greenspan repeated his assessment that the probability of a U.S. recession had moved up toward 50 percent but noted that corporate America’s debt levels were in good shape, which should help cushion the blow from tightening credit terms.

    “The real story is, with the extraordinary credit problems we’re confronting, why the probabilities (of recession) are not 60 percent or 70 percent,” he said.”

    What a clown! He created the large bubble that induced the credit crash: I feel sorry for Bernanke, taking over to preside over the mess Greenspan left.
    One thing is sure: the house prices ride up is all but over.

  105. I was reading this at Chapter the other day:

    http://www.westerninvestor.com/

    I Marketer said that 72% of recent ‘Central Surrey’ were bought by ‘investors’, of course he went on to say everything is good because they are long term investors. I wonder how long term they will be when appreciation simply flatlines and the rent doesn’t cover the mortgage in a few years when the units complete.

  106. Domus

    This has just come up on Google:

    http://tinyurl.com/2b583g

    Bloody stunning! I thought it would not unravel so fast, I thought it would take a bit longer.

  107. Snick

    “Unfortunately uneducated immigrants are going to learn the hard way…”

    They’re not a dumb as you may think. They usually come from countries where hard work with very few frills is the norm.

    They will be very careful as to how they spend their hard-earned money.

    They probbably would have a stroke learning that some useless “specu-vestors” made gobs of money by producing/contributing absolutely nothing to society.

  108. Strataman

    snick: “They probbably would have a stroke learning that some useless “specu-vestors” made gobs of money by producing/contributing absolutely nothing to society.” I would have to agree, the most uneducated as to survival and frugalness (is that a word) are the spoiled children of baby boomers who actually think it is NORMAL to get what they think they deserve. A lot of these have Masters degrees! 🙂

  109. Strataman

    Domus : “Bloody stunning!” Can’t be true, sorry Geezer always said London never goes down and Vancouver was just joining the elite membership. Fake article no doubt! 🙂

  110. blueskies

    an over weening sense of entitlement led to my downfall… it’s not fair!

  111. Disbelief

    Deedub
    There is no question that Communism has prevented the ones living under it to hearing and reading of what they want you to see and hear. A few years back I remember people from communist block countries thinking that the wealth of the west was to be handed to them and when this was not the fact they soon moved back to their own countries. There is no question that these such immigrants are definitaley tougher than their western counterparts but ignorant just the same.

    Snick
    If being careful and buying into this overpriced city is brilliant then pony up and buy a few asignments yourself and let me know how you do.

  112. Strataman

    Germany is an incredibly good example of how Communist raised citizens even in the same language and original mother country are unable to adapt to capitalism. Travelling in Germany easily shows the totally differant attitude. Despite millions of subsidized West German handouts the former East Germany is for the most part completely unproductive, living under a presumption that the state “owes them a living”. I wouls have to agree that for the most part persons from communist countries although adept at surviving are hardly productive. China on the otherhand was never really a state sponsored economic entity, it was more a philosophy, if you didn’t work you died!

  113. Domus,

    You follow housepricecrash.co.uk and UK news links there? Mainstream UK papers seem the most doomsday of anyone these days. Basically, resigned to the fact of a crash. I am talking supposed ‘quality dailies’ like the Telegraph, the Times, The Independent, The Guardian .. not talking the Daily Mirror here. Of course, many of them get posted here anyway.

    In N.A., here’s a good one from Krugman at New York Times, entitled, ‘After The Money’s Gone’: http://tinyurl.com/2umvvp

  114. Domus

    Hi Macchiato ( I like your name and what it means….):

    I know Krugman’s piece, I read the NYT regularly.
    Yes, I follow the UK: mostly Guardian, Economist and Times. Occasionally Telegraph, they have good columnists. I think Canada’s credit markets and house prices are somewhere in between US and UK in structure, so what happens in Britain is a bot of a “canary test” of what’s coming our way.

    Housepricecrash is a strange site: I don’t always like their style and content, but they have a great press review which is constantly updated. Saves some time indeed.

    I think things are unravelling quite fast now: I find it almost addictive to follow.

    It’s like a huge piece of theatre of which you know the end but you are not quite sure about all the steps which will bring you there.

  115. coco

    The big mess….

    U.S. national debt 10 trillion, with all the future retirees and medical expenses estimated to balloon to 65 trillion if it is not paid off. Yet the national debt is rarely talked about.

    1.8 million subprime loans are scheduled for their first interest rate reset in 2008 and 2009
    200,000 of these loans are already 90 days or more past due or in some stage of foreclosure
    1.4 million of these loans that are current may not remain current after their interest rates reset

    200,000 of these loans are already 90 days or more past due or in some stage of foreclosure.

    Worries about foreclosure housing help being expanded to include larger mortgages. Banks think even with Fed intervention, that the U.S. government could be on the hook for foreclosures in the future anyway. Banks are worried that they will have to tighten credit further if this happens by raising interest rates, which would effect people with good credit. If the government ends up with foreclosures, who buys this debt? How much more money or appetite do you think is available worldwide to help the U.S. out of its next financial pickle?

  116. coco

    Canadian Commercial Paper remains frozen, bailout plan misses deadline.

    http://tinyurl.com/24mer8

  117. coco

    Some of Canada’s biggest companies spent the past two weeks firing off warning flares about declining earnings expectations.

    http://tinyurl.com/2xxbkc

  118. coco

    Good for a chuckle….this headline from India

    No Santa Bernanke for stock markets

  119. coco

    The slowdown in the Canadian economy, which has only just begun, is already leaving more machinery and equipment idle, and retarding the growth in the net worth of Canadian households who continue to amass more debt.

    http://tinyurl.com/3yacb8

  120. coco

    ‘Moderate’ growth seen for real estate in 2008

    http://tinyurl.com/2p7co7

  121. coco

    Moderate growth…. Only 3.5%

    There goes the 900k average SFH price…CMHC predicted for 2008.

  122. coco

    CIBC…subprime loss estimate…

    Darko Mihelic, at CIBC World Markets, said: “We estimate we could lose as much as C$2.4bn pre-tax in the first quarter of 2008”.

  123. coco

    Stagflation May Return as Price Pressures Meet Credit Squeeze – The world economy is facing the risk of both recession and faster inflation.

    http://tinyurl.com/2lej5g

    (70’s/80’s retro?)

  124. Annon

    If a global recession is what it takes to reset to the market so that it can start clean again, then I guess it’s better to have it sooner than later.

  125. robchipman

    coco:

    Not that I put much stock in Royal Lepage or CMHC or CREA predictions (how have they done on the way up? Consistenly undershot, no?), RL predicts 3.5% nationally, but also says “Vancouver, with the country’s highest home prices, is forecast to remain powered by a strong B.C. economy ahead of the 2010 Olympics”

    Domus:

    Those are big price drops in London, but notice the definition of tightening credit. “The average rate offered by lenders on a mortgage for 95 percent of the price of a property, fixed for 24 months, increased to 6.44 percent from 6.42 percent in October, the Bank of England said Dec. 11”. I’m in no position to judge, but “offered” at 6.44% for 2 years in the UK may be the same as posted rates here – i.e., nobody pays them. Real rates for a two year in the UK could be 5.44%, for example. My question is: is the mortgage rate increase really the cause of price drops, or is it somethign bigger/different?

    I also think you’re a little tough on Greenspan. Here’s why: cb’s have to juggle on roller skates, and its not easy. He kept the balls in the air, which means we didn’t crash, but the root illnesses weren’t solved, either. He’s handed it off to Bernanke, and he, like the rest of the cbs around the world, is injecting cash rather than solving the apparently obvious root problems. I’ve said it before: cbs will pick inflation over recession, hoping (or possibly actually believing) that they can control the game. They’re doing that now, and stagflation (which we identified as a clear possibility last year) looks more likely.

    I don’t think Greenspan was deluded. I think he looked at the problem, had a pretty good grasp of it, looked at his toolbox, found it somewhat wanting, and did his best. Did he really create the mess? One guy, that much power? I’m skeptical. I think his role is at least as reactive as it is proactive, and frankly, probably more reactive. (I think you’re under-estimating the challenge, I guess).

    Disbelief:

    “I have noticed Rob being a little reserved lately”

    I’m not sure you’ve been listening to me. I’ve always been pretty reserved with buying advice, but others have spun that various ways. Here’s the advice, and it hasn’t ever changed:

    1) Buy what you can hold.
    2)Take care of the downsides, because they are real. The upsides will take care of themselves.
    3)Buy property with good metrics. The more those metrics are ignored in order to get CA, the more its a speculative play and less an investment.
    4)Real estate investment is long term, because that’s the best way to beat the reversals. 5 years is overnight.

    That gets spun into “Buy right now at all costs regardless of any other consideration”, but my actual recommendations are on record and have always been reserved and conservative. You’ll note that few of the spinners actually quote me. The valid criticisms are that other investments can provide better returns (which can be both true and false, obviously).

    There is something else to consider that makes the whole thing complex, and confuses a lot of readers: Individual circumstances modify all of the above rules. For example, if you’re in real estate now, and want to stay in real estate, but have an inferior property, right now is a good time to make a trade. In other words, right now is a great time to buy…if you are a certain type of person. There are, needless to say, other circumstances which justify buying right now, but for most people the metrics simply aren’t there. If any of this seems new to you I think that perhaps you haven’t really read me closely.

  126. Annon

    “First, the real alarm should be sounding as U.S. investment abroad has all but collapsed, nose-diving from $42 bln to $4 bln. This illustrates the slowing economic activity as the result of credit unwinding. It is just starting.

    Second, the increase in foreign inflows is mostly from the UK increasing its purchases of U.S. treasuries. Why? It is what we told Minyans to expect: as credit unwinds there will be demand for dollars. This is why the UK bought treasuries. Everyone wants treasuries. Debt is unwinding.”

    http://tinyurl.com/2mrvp2

  127. coco

    Stagflation is the Feds worse nightmare, as you can’t control a slowing economy and inflation at the same time. Stagflation is known to cause a recession sooner or later.

  128. coco

    Centro Properties, an Australian company that is one of the largest owners of shopping malls in the United States, announced Monday that it was having trouble refinancing loans and might have to sell assets.

  129. Brian

    Coco,

    It is difficult to buy a property now because of high prices. It would be more difficult if you are planning to buy during a recession, since financing will be much more difficult.

    It is a catch-22 case, unless ones has a lot of savings to buy properties in cash 😉

  130. coco

    Why should I care about the Canadian Credit Crunch?

    http://tinyurl.com/yspy9d

  131. coco

    Brian,

    Yes, cash is king in a recession.

  132. coco

    Then again….if the credit crunch gets tighter it may be harder to get any kind of loan, with or without a recession. Read article above: Why should I care about the Canadian credit crunch?

    Mortgages rates are tightening and loan qualifications are tightening.

    (credit card interest rates have risen recently too, but this is not mentioned in the article)

  133. coco

    Some banks/credit unions quietly raised their 5 year mortgage rates from 7.35% up to 7.39% recently.

    Sure, you get a discount if you have good credit and have been a customer for a long time, but even the discount being offered off the posted rate is less than it was in the past.

  134. coco

    BC Retail sales numbers….seems a lot of people went across the border after all. Will be interesting to see Oct – Dec numbers next year.

    May 1.3
    June 0.1
    July 0.0
    Aug -0.1
    Sept 0.1

  135. Coco,

    You obviously aren’t following the dialed in Peter Simpson (sarcasm), spouting some Helmut wisdom:

    http://tinyurl.com/2mpzph

    “Pastrick says mortgage rates might increase by 75 basis points by September 2008, yet unlike the U.S., he sees no credit crunch on the horizon.

    say what?

  136. robchipman

    Coco:

    You’re quoting retail again. My December 10 rate sheet has 5 years at 5.85%. That’s a drop, not a rise. You don’t need to be a long time customer for that (its called competition and eating the other guy’s lunch). As for needing good credit, um, you’re not really bringing that up, are you? We’re talking about borrowong money. Obviously the baseline assumes that the borrower will pay the loan back. Money is not in short supply. That’s not the problem (and if it was, neither stagflation nor inflation would be a threat). Liquidity where there should be none (or at least less) is the problem de jour.

  137. WoW

    Hi Rob – how much do you see your market (that you track) drop this spring? (in percentage terms) – thank you.

  138. robchipman

    WoW:

    Are you talking about 2008? If so I have no answer. Given what we’re seeing, and depending on how you define a market it could go up as easily as down.

    Here’s what I mean:

    The local economy has lots of work booked through the Olympics, both for the Olympics themselves and other infrastructure work (and the latter actually extends beyond 2010). That can be a positive for prices.

    We’re seeing lots of liquidity injected. That looks inflationary, which can be a positive for prices.

    There’s a fear of recession in the air. That indicates that rates will fall. That can be a positive for prices.

    Many informed forecasters predict rising prices in 2008. Why would I bet against them?

    That’s why I say we could see rises.

    On the other hand…

    High prices are the cure for high prices.
    A strong economy doesn’t always equate to strong real estate prices.
    We have a ton of supply in the pipeline.
    Fears of a recession may prove accurate.
    Inflation may emerge as a real threat, leading to higher rates.
    A lot of RE value is derived from cash flow, and that cash flow (rent) is less insulated from upward pressure than mortgage funds are.
    The sub-prime ripples in our global pond have not yet broken on the shore.
    The market will change – it always does.

    And that’s why lower prices are a distinct possibility.

    How we define a drop or a crash is important. Are stable prices but lower volumes a drop? Does the drop have to be nominal, or real? Is a single digit drop even significant? I think its worthwhile puting some meat on the bones there. A ot of people like to describe the future, but I’m not sure they’re all envisioning the same picture.

  139. WoW

    What do YOU envision, Rob? How much of a drop?
    I know, I’m putting you on the spot, just for fun (hope you don’t mind) – but do you have a prediction, what is your outlook?
    thanks.

  140. M-

    Macchiato, I had a look at that article, and was wondering what kind of idiot wrote it…

    And I found my answer at the bottom:

    “Peter Simpson is chief executive officer of the Greater Vancouver Home Builders’ Association. E-mail peter@gvhba.org

  141. jesse

    “There’s a fear of recession in the air. That indicates that rates will fall. That can be a positive for prices. ”

    Yes, CAN be. If the qualification criteria for loans becomes more strict, this has an adverse effect on the number of buyers and therefore prices, even in the face of lower rates.

  142. jesse

    “I had a look at that article, and was wondering what kind of idiot wrote it…”

    The Sun is under intense advertising pressure with internet taking more of the advertising pie every passing year. NFW will they print something that will piss off the people that pay their bills, such as builders and Realtors. You can pontificate “journalistic integrity” all you want but these guys need to stay profitable. They lost the readers truly looking for unbiased articles long ago.

  143. Jesse, point taken, and I will note the article was in the homes section, still it didn’t say ‘advertorial’.

    Regardless of potential realities that you mention, nothing wrong with a calling bullshit and having a laugh.

  144. robchipman

    Jesse:

    You bring up another thing that might happen (tightening qualifications) that might be a negative for prices. I don’t see that happening. Lenders seem to want to get money lent in a big way, still, despite the horror stories we heard from the US. I don’t think that is a non-sequitar – after all, the pain from the foreclosures and bad mortgages isn’t that bad – its the securitization, re-packaging and re-selling of the debt that caused the grief. CIBC, for example, isn’t looking bad because it made bad loans in Arizona. Do you really see bowworing requirements tightening up?

    Wow:

    I don’t have a clue what’s coming. This trend has gone too long for me to say its just starting, but expansionary periods take on a life of their own, so your guess is as good as mine (probably better, ’cause I don’t have a guess). Hands up everyone who called the top too early, and then did it again six months later. (See what I mean?)

    I’m comfortable with the unknown, and with change. I’d rather prepare for as much as possible than tell myself that I know the unknowable. I’m not saying the future is always unknowable, but I’m saying that the next 6 months will likely have many twists, confounding even the best minds, making it pretty unknowable. Compare that to 2003. It was pretty easy to predict what was up then.

  145. coco

    Rob,

    “My December 10 rate sheet has 5 years at 5.85%.

    Rob,
    Do you have todays rate sheet?

    As far as banks cutting discount rates off mortgages ….I was offered a discount of 1.25% prior to that 1.50%. So, I must be dreaming that the discount window is actually smaller. I shopped around a lot and the amount of discount offered off the going rate is interesting.

  146. coco

    “Quoting retail again” yes, our economy needs good retail sales numbers so people can keep their jobs and/or not have their hours cut.

  147. beaner

    obviously it may not be considered a great time to buy. But does this hold for all unit types, there must be value to be found in places. If a FTB can afford the payments, is not looking to flip, and has a large down payment i.e. 30%, is it still a bad time? After calling for a top for the last 2 years, do we still wait for the next crash, especially if a solid unit is found now. This is the question facing FTBs.

  148. blueskies

    PARKING STALL WILL BE WORTH A 100,000.00 IN 2010.

    http://tinyurl.com/2mdw26

    🙂

  149. Snick

    WoW
    December 17, 2007 at 4:22 pm
    What do YOU envision, Rob? How much of a drop?
    I know, I’m putting you on the spot, just for fun (hope you don’t mind) – but do you have a prediction, what is your outlook?
    thanks.

    Did you like the “answer” he gave?

  150. -A-

    Rob:” Not that I put much stock in Royal Lepage or CMHC or CREA predictions (how have they done on the way up? Consistenly undershot, no?),”

    “undershot, no?” Good one Rob, have they ever forecast a sales or price decline?

    Did they forecast the 80’s crash?
    or the 90’s milder crash?

    Did they not forecast a price recovery every spring, for several years which didn’t materialze for years .

    Your statement tells have the truth no?

  151. News Flash

    “If the qualification criteria for loans becomes more strict, this has an adverse effect on the number of buyers and therefore prices, even in the face of lower rates.”

    The problem with you bears is you read the sensationalized US media reports online and think it applies in Canada. CMHC sets the “qualification criteria for loans” on housing. They have been loosening standards. Prices are increasing accordingly.

    Royal Lepage: Forecast 4% for 2008 in BC.

    They forecast around the same in 2004 and we got 20%. Looks like more of the same.

  152. News Flash

    “The Sun is under intense advertising pressure with internet taking more of the advertising pie every passing year. NFW will they print something that will piss off the people that pay their bills”

    I guess you missed the front page of the Sun a week or so ago. So much for the conspiracy theories.

  153. News Flash

    “Did they forecast the 80’s crash?
    or the 90’s milder crash?”

    Not sure, but at least they got it right over the past 5 years or so, although were way too conservative.

    You on the other hand…

  154. News Flash

    “What do YOU envision,…? How much of a drop?”

    The chance of a drop next year are somewhere between slim and none.

  155. -A-

    “Royal Lepage: Forecast 4% for 2008 in BC”

    How long do you think the person who slapped together the forecast would work for Royal Lepage if the forecast didn’t call for an increase?

    Again, have they ever forecast a price drop?

  156. blueskies

    #
    News Flash
    December 17, 2007 at 8:15 pm

    “What do YOU envision,…? How much of a drop?”

    The chance of a drop next year are somewhere between slim and none.

    I’m going to go out on a limb here and predict 10% down YOY Dec/08….if we are lucky

  157. jesse

    “Do you really see borrowing requirements tightening up?”

    Not yet. My worry is it won’t take much tightening to have a large effect on the number of potential buyers — losing FTBs can have a ripple effect that can start slowing the pace of other sales. Basically conditional offers start falling through and the inventory starts piling up, leading to price pressures.

  158. Domus

    Rob: “Do you really see bowworing requirements tightening up?”

    YES.

  159. Domus

    beaner:

    “If a FTB can afford the payments, is not looking to flip, and has a large down payment i.e. 30%, is it still a bad time?”

    Again: YES.

  160. blueskies

    “If a FTB can afford the payments, is not looking to flip, and has a large down payment i.e. 30%, is it still a bad time?”

    you are essentially buying an asset with a very high probability of depreciating the moment you acquire it REIC blather notwithstanding…….

  161. blueskies

    According to Merrill Lynch, the slope of the yield curve and the value of credit spreads point to a 100% chance of a recession.

    i found this on the internet…. it was lying there

  162. beaner

    recall that this is for a long-term hold. rob?

  163. Newcomer

    >>PARKING STALL WILL BE WORTH A 100,000.00 IN 2010.<<

    That is so beautiful. Especially since, even if you were to get the $250 he claims you could get. And even if you took out a 40 year mortgage on the parking stall, it would still be cash flow negative.

  164. Jeff

    “Royal Lepage: Forecast 4% for 2008 in BC”
    How many Realtors would work for Royal Lepage if it forecast a decline?
    Realtors with that company pay them monthly fees to be affiliated in the neighbourhood of $250 per month. And that’s just for carrying the Royal Lepage business card.

  165. Jeff

    blueskies:
    “10% down YOY Dec/08”
    I agree.

    My prediction:
    2008: down 10%
    2009: down 15%
    2010: down 20%
    2011: down 5%

  166. Annon

    News Flash:

    “…. Not sure, but at least they got it right over the past 5 years or so, although were way too conservative. …”

    Finally, we know News Flash’s RE expertise is as good as the last 5 years. Though indirectly answered, I thought the response makes a lot of sense.

  167. Annon

    Rob, if Alan Greenspan left a mess after his 18 years running FED and you are saying people may be “hard” on him, my guess is then US economy was destined to fail? Who can run better than some expert with 18 years on the job? Warnings and extensive analysis were provided free to him, and yet Alan Greenspan chose to look the other way. Is he stupid? Not if he knows how to make himself look good while on the job. And this inflationary policy where the so called “2%” optimal rate is only less than 40 year old. And just because most average people have but no choice to ride with the tide does this inflationary policy even seem to work. Inflation over recession? They were caused by the same bad policy. Which comes first isn’t all that important.

  168. Geezer

    blueskies

    “rich people don’t become rich by doing stupid things like buying RE at the height of the bubble.”

    Yeah, just look at all them dumb poor folks who have recently been buying multi-million dollar suites at The Georgia, The Shangrila and The Carlton. Poor dumb slobs, and meanwhile you smart rich guys just get richer. There ain’t no justice.

    Strataman wrote:

    “Can’t be true, sorry Geezer always said London never goes down and Vancouver was just joining the elite membership.”

    Sorry, never said either of those things. Might be a good idea to read what I actually said rather than relying on other people’s regular and repetitive misquotes. But don’t worry, I’m used to the bears only reading partial sentences.

    Disbelief wrote:

    “There is no question that these such immigrants are definitaley tougher than their western counterparts but ignorant just the same.”

    Oh! The irony! Way to go Disbelief, nolledge is power.

    Hey folks, I just remembered. “Sell on good news and buy on bad news.” If that’s accurate most of the posts on this forum represent the mother of all BUY signals.

  169. Priced Out

    So Geezer, what are you going to buy?

  170. Fozziebear

    Geezer wrote:

    “Hey folks, I just remembered. “Sell on good news and buy on bad news.” If that’s accurate most of the posts on this forum represent the mother of all BUY signals.”

    Yes Geezer, we all know how well you can tell the difference between “news” and “propaganda”.

  171. blueskies

    If that’s accurate most of the posts on this forum represent the mother of all BUY signals.

    aww jeeez now you are spewing it out both ends….. cut it out!

  172. coco

    Beetle epidemic could push B.C. into recession: report

    http://tinyurl.com/2c6glk

    (forestry products are BC’s #1 export…even to China, India and Japan)

  173. blueskies

    #
    Jeff
    December 18, 2007 at 12:00 am

    blueskies:
    “10% down YOY Dec/08″
    I agree.

    My prediction:
    2008: down 10%
    2009: down 15%
    2010: down 20%
    2011: down 5%

    Q3 2010 official start of US depression
    11 quarters back to back neg growth…

    to be fondly remembered as the “Grand Depression”

  174. blueskies

    (forestry products are BC’s #1 export…even to China, India and Japan)

    strangely enough we are tree-locked…..

  175. coco

    The world has a drug problem — it’s called British Columbia.

    http://tinyurl.com/2g82rm

  176. coco

    Blueskies,

    There will be no land shortage once the pine beetle eats its way through the forests. The interior is already a gigantic red mess of dead trees the pine beetle has gnawed profits away on. They can’t harvest the second grade dying wood fast enough.

    Considering 40% of BC exports are forestry related products, this is not a small industry or as minor as some make it out to be.

  177. coco

    Inflation up to 2.5 per cent in November: StatsCan

    http://tinyurl.com/2cpt27

  178. Domus

    From today’s Guardian: “Rental demand through the floor”.

    http://tinyurl.com/2julw5

  179. robchipman

    coco:

    The December 10 sheet was the latest. I’ll get another this week. If you quote “retail” rates, i.e., the bank’s posted rates they’ll always look high, but I don;t think they’re representitive. You may go to the bank and grind them so that you get almost as low as what other borrowers get off the shelf, but that doesn’t mean rates are going up. Generally, when you post rates as a bad news item, you post rates that are way higher than any of my clients pay.

    It could be that you’re the norm and I’m the anomoly. If so, here’s a heads up for readers: you’re paying more for your mortgage funds than you should be paying. Find a good mortgage broker, or find a good Realtor who can find you a good moretgage broker.

    -A-:

    Are you saying that you and I agree that most pro forecasters get it wrong? Or are you saying that we disagree in that we both say most pro forecasters get it wrong? Just to make it simple for you, here’s what I’m saying: I don’t put a lot of store in pro forecasters, and I put even less store in my own forecasts. Therefore, if a pro predicts an increase, I take it with a grain of salt, but I’m not foolish enough to think I can do better…wait, I think I see where we part ways! You’re convinced that most of the world is stupid, and you can figure things out better than they! (Aw, isn’t youth cute! 🙂 )

    Jesse:

    “Not yet. My worry is it won’t take much tightening to have a large effect on the number of potential buyers — losing FTBs can have a ripple effect… leading to price pressures”.

    I’m with you on the former, but we’ve the loss of FTBs has been a spectre on the horizon for at least a year now (which I think speaks more to the difficulty of predicting the when rather than the what – loss of FTBs should logically hurt price increases, but when does it start?)

    Domus:

    Contrary position duly noted, but I haven’t seen tightening credit yet (at least not for mortgages here). I’ll keep an eye out for it.

    Annon:

    “Who can run better than some expert with 18 years on the job?” I think you’re missing my point. I don’t believe that one man can control the results generated by the actions of billions of people. Call me cynical. I think we can agree that an awful lot of the great disasters of the world were engineered by experts. Were they all stupid? Or were the challenges they faced bigger and more complex than we sometimes allow? Greenspan kept the ship from sinking, which is good. He may well have laid the foundation for current and future problems, which I think is probably par for the course. I hope Bernanke will keep the ship afloat as well, and I assume he’ll lay the foundations for future problems. I can’t see how the latter could be avoided. I do think its facile analysis to lay all the blame at the feet of one guy, as if Greenspan could have controlled the globe.

    “And this inflationary policy where the so called “2%” optimal rate is only less than 40 year old.” Do tell! 2007 – 40 = 1967, correct? If you remember ’67 you’ll probably agree that we never really had a true, practical understanding of inflation, at least in Canada. Am I the only one who equates the 70s with huge inflation? Wage and price controls, etc.?

    “Inflation over recession? They were caused by the same bad policy. Which comes first isn’t all that important.” Nice theory, but it makes me think that maybe you haven’t experienced both. Not having enough money to buy everything you want, and feeling like you’re losing ground is one thing. Not having a job or income, or having to leave home to find work is another. Its just my personal preference, but I’ll take predictable inflation over recession any day.

  180. Annon

    Rob, you are assuming that inflation will always work and therefore you prefer inflation over recession. And so you will pick inflation over recession any day. What do you do when inflation no longer works and that instead of mild recession you get depression? How about we get rid of business cycles altogether so that there is no crazy boom nor recessions?

  181. paulb

    ECB injected 500 Billion into the system today…. Oh My God!

  182. Domus

    I think Rob believes inflation is just a small price to pay to keep things afloat: I don’t think Rob has a fair knowledge of monetary history, based on this statement.

    Inflation is like an extortionate money lender: it gives you some respite in the short-term, before hitiing you hard by asking to be paid double.

    I think the CBs will eventually inflate: I also think this will be disastrous for RE in the long-run.

  183. Domus

    From today’s local news in San Diego, CA (just a graph):

    http://tinyurl.com/32kmzc

    Do you the time-roll-back arrow of VHB? Man I miss VHB: he was by far the best market-comment on the block! And he was right, although it took a bit longer than expected for things to unravel….

    VHB, if you are reading, I salute you!

  184. Anonymous

    Fed Tightens up Lending Rules

    http://tinyurl.com/yno3z8

  185. Priced Out

    Out of curiosity, I drove by the King Albert house the other night (I live nearby). No “sold” sticker and the place looks vacant. I really like the area though. Too bad about the price.

  186. robchipman

    Annon & Domus:

    You’re wrong about what I’m thinking or assuming. Read the post again. I’ll choose predictable inflation over recession anyday. That’s a no-brainer. The key word is predictable.

    Tell me if this makes any sense: If inflation is predictable it loses much of its threat. You only lose to it if you don’t pay attention. The danger is when the inflation rate is unknown, variable and large.

    Do I think inflation is controllable or that a predictable range is possible to achieve? My jury is out on that, and I suspect we’ll soon find out. Do I think CBs think they can control it? Of course I think that, and they provide evidence of that thinking by setting inflation targets and by choosing liquidity over recession.

  187. Annon

    “Fed Tightens up Lending Rules”

    This is just a joke. If the credit rating companies weren’t in such a interest conflicted relationship with lenders and investors, how can garbage loans be AAA SIV? If the Fed never bails out anyone, who would be dumb enough to lend to people who couldn’t pay back? Let’s not forget that subprime was Alan Greenspan endorsed/led phenomena. So it’s a top-down policy that is system wide by default. Sure, let’s just put more regulations until the economy or market evolves to find holes again. Do they all enjoy this tail chasing game?

  188. Annon

    Ok Rob, so am I to understand that you are saying this inflationary policy may or may not work in a long run? Long run as longer than the past 30 years of experimenting such policy worldwide? For sure anyone who saw the effect of inflation can take advantage of leveraging they real asset to buy more asset that would inflate.

  189. Brian

    coco
    “Inflation up to 2.5 per cent in November: StatsCan”

    You forgot to look at Vancouver numbers. We are enjoying a low inflation. Here are the numbers:

    Here’s what happened in the provinces and territories (previous month in brackets):

    British Columbia 1.3 (1.6)
    Vancouver, 1.4 (1.8)

  190. coco

    “It could be that you’re the norm and I’m the anomoly.”

    Yes, this is what I was trying to tell you. There are different discount rates for different mortgages. If you borrow more you will get a bigger discount, if you borrow less you will get less of a discount. I really did shop around, but because I do not need a 400k mortgage, discounts off the going rate are much smaller. In the past this was not so, it was the same discount rate whether you borrowed 100k or 400k.

  191. Domus

    “If inflation is predictable it loses much of its threat.”

    Rob, not to be pedantic but you call for it. In his “Quantity Theory” of money, Milton Friedman (a nobel prize winner) clearly shows how predictable inflation (that is, inflation which is exactly forecast by rational agents) generates lower: labor supply, investment, output per capita, consumption.
    It works very much like a tax (whose revenues go lost!). Friedman also compellingly shows how a small difference (say from 2% to 4%) in the equilibrium inflation rate is accompanied by large economic losses for most economic agents.

    In fact Friedman argues that unexpected inflation would have also no effect on labor supply and investment and therefore would be preferable. It is only when agents fully internalize inflation (that is, update their inflation “expectations”) that we have the full-blown GDP and welfare losses.

    This is why cenral banks are more worried about measures of expectations of future inflation by consumers than from current, realized inflation.

    This is the theory.

    What is the practice? Well, I guess the point here is that it takes time for inflation to produce its ugly effects. In the short term, printing more money would partly avoid a painful slump: most people who are in debt are all for it and they have channels to exert political pressure.

    Sorry but you couldn’t be more wrong on this.

  192. coco

    Brian,

    Your reading the actual headline of the article, not my comment. If I make a comment about an article I post, it is at the end in brackets.

  193. -A-

    Newsflash:

    Rob says:
    “Therefore, if a pro predicts an increase, I take it with a grain of salt, but I’m not foolish enough to think I can do better…wait, I think I see where we part ways! You’re convinced that most of the world is stupid, and you can figure things out better than they! (Aw, isn’t youth cute! )”
    I think he is referring to your uncontrolled and affectionate embrace of the Lepage forecast.

    He seems to think, and I could be wrong, that the forecast by the RE pros don’t have much predictive value.

    I agree, it’s mostly marketing, and entertainment like a horoscope, problem is some folks take it as gospel.

    Athough I do think, Shiller, The Ecoomist, and the IMF, have a little more credibility than Soper and Muir.

  194. robchipman

    Annon:

    Am I saying that the inflationary policy may or may not work out? Sure. But that’s not saying much other than recognizing that inflation has downsides, and upsides, when you look at the big picture. I’m not saying I want inflation, but I’d prefer predictable inflation to recession.

    Domus:

    You’re not going to get me to disagree with Milton Friedman, no matter how much you tempt me! I trust his intellect way more than, say, Naomi Klein’s 🙂

    That said, you can make me back up. I’m not trying to make a macro economic pronouncement, and if you’re reading one, you’re taking my post too far. I, personally, am not too worried about inflation if it is indeed predictable, and something that can be banked on (I’d still invest, and still find other investors, and we could more accurately predict returns). I’d also be satisfied with 5% per year, each and every year, on real estate. And I don’t want to see a recession. Luckily, I don’t run the world economy and don’t have to worry about the same outcomes that concerned Friedman.

    Do I think any of my three wishes will come to pass? Not likely, so I’m not too concerned about the theoretical fallout on GDP, labour supply and consumption. I understand that inflation is very much like a tax – it is a cost that does not bring many benefits. Is it better that the cost be predictable or unpredictable? If Friedman says the latter, I’ll go with him. But right now we’ve got pretty low inflation, and we’re staring a new beast (in the form of the global credit crunch) in the face. Short term I think CBs will opt for inflation, and, short term, I tend to side with them. I don’t see inflation getting way out of hand. If it does, I reserve the right to change my mind. After all, we’re talking about which bad thing we’d prefer to experience, not whether one thing is bad and another is good. Neither recession nor inflation are good.

    Coco:

    I’ll put sarcasm tags on next time. I’m not the anomaly. The rates I’m quoting you are easy to get. Some borrowers even do better than me. They’re not all borrowing millions. I’ve done as little as $45,000, for example, in recent times. If you’re paying over 6% for a 5 year now, you need to shop more. (Big dif between posted rate and best rate; Vancity’s posted rate right now is 7.39%, for example).

  195. coco

    Rob,

    Do you have a new and old rate sheet now? Did the posted rates for some banks/credit unions rise yesterday? Practically everyone was sitting at 7.35% not the 7.39% your quoting now.

  196. robchipman

    -A-:

    Let me clear that up. I’m referring to you, not Newsflash. I don’t put a lot of store in predictions, whether they make me feel comfortable or not. I think you do put a lot of store in them if they make you feel good.

    I’ve told you I don’t have much faith in professional prognosticators and your complaint, essentially, is that I agree with you, but that I do it for the wrong reasons and don’t go far enough. You conflate my lack of faith in their predictive powers with a lack of respect for their intelligence. I have the former, but not the latter, and so I reserve judgement (and you and I differ on reserving judgement- you dismiss people who have under-estimated the gains in preference for people who have repeatedly miscalled this market. Go figure).

    The bottom line is that I don’t have a prediction for Spring 2008. That, on its own, makes me neither bear nor bull. I’ve also advised against most investment purchases in the current market. That is anti-bull. However, I’m still not certain that we’ve reached a top yet. That still doesn’t make me a bull, even if it doesn’t make me a bear.

  197. robchipman

    Coco:

    One mortgage broker is on holiday right now and I haven’t seen the other yet this week. I can’t see Vancity posted rates on their site (wonder why?) but at canadamortgage.com they’re at 7.39% right now for a 5 year. Posted rates range from 7.39% to 5.99%.

  198. Domus

    “You’re not going to get me to disagree with Milton Friedman, no matter how much you tempt me! I trust his intellect way more than, say, Naomi Klein’s”

    For the first time I think I fully agree with you on something!

  199. coco

    Logging contractor files for bankruptcy

    Vancouver Island-based Ted LeRoy Trucking seeks protection from creditors

    http://tinyurl.com/2w4ypd

  200. -A-

    Rob, I don’t care much about your position on where the housing market is headed.

    But your monetary policy theory is quite interesting.

    You don’t have any formal education in Economics do you?

  201. coco

    Rob,

    The thread is getting kind of long now. Please post some new numbers for Friday, Monday, Tuesday….or something. I’m getting kind of dizzy from the long scroll down.

  202. -A-

    Yeah, Rob, Numbers please

  203. Annon

    Rob, the impact of inflationary policy is more than just the mere inflation reading central banks give you. I think you over simplified the impact by saying “If inflation is predictable it loses much of its threat.” Milton Friedman didn’t not remove housing, food, and energy prices from the inflation he’s talked about. What good is a prediction if inflation is not measured system wide?

  204. robchipman

    -A-

    I don’t have a monetary policy theory, evidenced by my statement “I’m not trying to make a macro economic pronouncement, and if you’re reading one, you’re taking my post too far.”

    Couple quotes from you:

    “The strong medicine worked, but the side effects are just beginning to show up,
    … Can any of the realtors on this blog offer an alternative explanation?”

    followed by:

    “Rob, I don’t care much about your position on where the housing market is headed”.

    You need to make your mind up. 🙂

  205. robchipman

    Annon:

    I’m not arguing that inflation is good and recession is bad. I’m not even saying that, as a rule, inflation is preferable to recession. And I’m certainly not saying that predictable inflation is an absolute good, especially if its a false number arrived at by excluding various things (and I’ve stated in the past that the inflation figures we hear certainly don’t seem trustworthy).

    I in fact said:

    “Neither recession nor inflation are good”.

    “Short term I think CBs will opt for inflation, and, short term, I tend to side with them.” (note the “short term” part).

    I’ve also said that predictable inflation, in practical terms, is not something we’re ever likely to see.

    I did say that if inflation was predictable it would lose much of its threat, but that’s from a pretty restricted viewpoint (my own). I’m not sure that Uncle Milt and I agree on what we mean by predictable, and I certainly am not going to challenge his theory.

    I would, however, prefer to be able to bank on a set rate of inflation in order to turn it from an unknown quantity to a known quantity when I’m figuring whether an investment is good or not. That’s not arguing monetary policy and the effect of predictable inflation on the economy as a whole. Its also a moot point, because I don’t think we’re going to see predictable inflation.

    I do understand that one of the long term effects of inflationary policy is exactly what we’re faced with today. I get that. I’d just prefer that the cure not be worse than the disease.

  206. Pingback: absolute number

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