Weekly Update
As mentioned earlier, there were 2,162 new listings in my target area last week, and 792 sales, for a sell/list of 36.63%. There were 903 price changes.
Inventory hit 15,734, of which 2,404, or 15.27% were over 90s.
The average list price of sales was $606,465, with average sales price at 592,248, a difference of $14,217, or -2.34%. Average DOMs was 34.
There were 86 (10.86%) overlists. Average list price of overlists was $634,154, with average sales price coming in at $652,594, a difference of $18,440, or +2.91%. DOMs for overlists was 19.
There were 32 price increases (3.54%/96.46%). Average original price was $632,083, while average new price was $608,856, a difference of $22,228, or -3.67. Average DOMs to price change was 49.
214 comments
Jeff, Oh yeah, plenty of homes in the Eagle Mtn. area in Abbotsford close to a million bucks.
Take a drive, check it out. About a 2.5 hour drive any Mon-Fri.
Average speed: 25 kmh
yikes… I thought only Toronto had that issue. The Golden Horseshoe is known for the 2+ hour commute into the city.
why aren’t those houses like $250,000?
Um, ’cause they aren’t in Toronto?
I went on a long walk in Coquitlam today and it seemed every block had houses for sale, and none of them had sold stickers. The situation for SFH in Coquitlam is dire.
Given recent numbers and psychology, it is more probable than not we will continue to see price declines for Metro Van residential real estate. I believe your interest and reference point will largely determine how you describe the market and the decline.
Rob describes a 20% drop over about 2 years or so as a “correction”. Based on a detailed analysis of a very smart fellow I know, I would say a 38% drop in that period is a correction.
As Rob alluded to previously a 20% drop only takes us back a few years. I suppose if you bought during that time period the affect of the “correction” could feel very much like a “crash”. A 38% correction takes us back further.
Taking this one step further I suppose we don’t really have a bubble in Vancouver because when bubbles pop there is nothing left. Going back to 2003 prices is far from having nothing left.
Add in inflation and a 10% drop (nominal) in each of the next 3 years is about a 40% real decline in prices.
buying in 2011?
a sell/list ratio of 9%?! for condos as per paulb
single digit sell/list ratio?! getting interesting!
http://money.cnn.com/2008/05/12/real_estate/Q12008_home_prices/index.htm?postversion=2008051310
Chris Carter was just talking about 40 year mortgages on BCTV news, “Very concerning to us in the financial industry” and he made some references to the US subprime and how people that need to take out40 year mortgages have no wiggle room against loss of job etc…
Dave
forget real (its important, but the masses don’t factor this in), when prices are down 20% (which may just be the start), what percentage of folks will have negative equity?
Its coming, and fast. I’m enjoying watching the events unfold.
Good for Chris. I hear banks are tightening up lending policies, so that could help going forward. Just wait until the construction job losses start to mount.
This listing frenzy is only the beginning.
When the panic sets in we’re going to see some real fireworks.
Hard to believe that a few idiots are still out there looking to buy….just when all hell is about to break loose.
a 9% sales/list would translate into what for MOI?
Exposed! UK Housing Minister’s fears on house price falls
By James Tapsfield, PA
Tuesday, 13 May 2008
The Government’s private fears over the dire state of the UK property market were laid bare today.
Housing Minister Caroline Flint warned the Cabinet that “at best” prices are set to fall by 5 to 10 per cent this year.
She also briefed colleagues that housebuilding was “stalling”, adding starkly: “We can’t know how bad it will get.”
The bleak assessment emerged when Ms Flint carelessly exposed a sheet of typed notes to photographers as she entered Number 10 for the weekly Cabinet session.
http://www.independent.co.uk/news/uk/politics/exposed-ministers-fears-on-house-price-falls-827391.html
joe blfsk – you are so rude, those ‘idoits’ you are talking about are Rob’s clients! Note to self: Rob would not buy at these prices….hmmm.
I agree, the listing frenzy is not even a frenzy yet, just the smarter money moving to cash in….as the fear builds, I expect the listings to shoot to the moon, quickly.
FV – don’t worry, they will have record listings by month end. Their listing data person is probably off sick or on holiday – the listings surge will continue.
Basic laws of fundamentals (economics) can be stretched – not broken.
UK turned on a dime. I imagine we could see the same thing locally. Prices should fall (definitively, and without room for debate) this month (I would imagine), and if this is coupled with significant increase in YoY inventory, I can’t see how the press does not pick this up as a lead piece, and then watch greed turn to fear turn to panick.
Got cash?
Anonymous { 05.13.08 at 7:18 am } Good for Chris. I hear banks are tightening up lending policies, so that could help going forward. Just wait until the construction job losses start to mount.
I think that construction job losses could be the “external negative event” that would get the ball rolling, high inventory will get things started, but slowly. When the olympic construction finishes up and new housing slows due to market flooded, could be the perfect storm???
Dave
click….
whirrrr……..
clunk….clunk…..clunk….hissssssss!
hmmm my Spinmeister 9000 just crapped out…
what gives?
Where is Newsflash?
“UK turned on a dime. ”
No it didn’t. At least not from anything I can see. It hung around flat for the most part of a year. It’s still YOY positive. What are you referring to?
Now serving…Vancouver’s condo marketing czar Bob Rennie is offering a $12 coffee card for the first 500 people to visit his new Howe St. at Davie sales project. It’s a brilliant strategy really, considering how addicted Vancouverites are to large, overpriced coffees and tiny, overpriced condos.
To be fair, not all the units are a shoebox-like 405 square feet. The penthouse units are a palatial 875 square feet.
“Where is Newsflash?”
Newsflash is in a “defensive” position…
ie ….head tucked between his legs kissing his a$$ good bye
Canadian Housing
Not-so Little Mortgage on the Prairie. New home prices were up 0.2% in March, led by a 2.1% gain in Saskatoon (yes, Vancouver, everyone is moving to Saskatoon, too). Prices were up 6.1% year over year vs. 6.2% in February, according to Stats Canada. Our trusty Finance Minister Jim Flaherty ensured us that the problems hampering the U.S. economy won’t be replicated in Canada, despite his belief that the U.S. housing slowdown has done some “psychological” harm to our market. So, when you pull up a chart of the Vancouver real estate home prices (www.bcestates.com/bcestates/index.html), rest assured that the hockey stick-like explosion in prices will either keep going up or go sideways.
Yup, true story. Politicians and realtors say so – just ask Bob Rennie
Median home prices drop in many cities
From the Associated Press
7:45 AM PDT, May 13, 2008
WASHINGTON — Median home prices fell in two-thirds of the cities surveyed during the first three months of this year, a real estate trade group reported today.
The National Association of Realtors said that median prices for existing single-family homes dropped in 100 of 149 metropolitan areas in the January-March period, while 48 metropolitan areas saw prices increase and one reported no change…
http://www.latimes.com/business/la-fi-homes14-2008may14,0,6309708.story
I hear banks are tightening up lending policies, so that could help going forward.
Rob said banks won’t tighten their lending standards and things will play out like the Great Bubble of ‘84-’90. Stop worrying guys go buy something! Preferably near the nail gun warehouses where you’ll always find work.
Nail gun repair and paint shops – always in demand! Ha ha ha….
UK – OK, you win – go buy something there!:))
A fool and their $ are eventually parted.
What a SHOCK – who knew?
ha ha ha…lovely.
News from The Globe and Mail
Forty-year mortgages spark concerns
TARA PERKINS
00:00 EDT Tuesday, May 13, 2008
Canadians are flocking to 40-year mortgages, often without a down payment, and the rapidly developing trend is beginning to ring alarm bells for policy makers in Ottawa.
Both the Finance Minister and the Governor of the Bank of Canada are expressing concern about the situation, as the U.S. economy continues to reel from a crisis triggered by mortgage holders who were in over their heads.
“We’ve seen an inclination now, a trend, toward longer-term amortizations and smaller down payments, and that is a matter of some concern,” Finance Minister Jim Flaherty said yesterday.
Forty-year mortgages have only been available here since late 2006. Anthony De Almeida, chief executive officer of the Canadian Equity Group Inc., estimates that 25 to 30 per cent of home buyers are now asking for them.
One banker from a large Canadian bank said the majority of new mortgages it is doing are now for 40-year terms.
“Over the next couple of years, you’re going to see more and more people utilizing the 40-year amortization, just because it lowers your initial mortgage payments,” Mr. De Almeida said.
Growth is rapid. Last year, only 9 per cent of outstanding mortgages were for terms longer than 25 years, but 37 per cent of all new mortgages were, said Jim Murphy, chief executive of the Canadian Association of Accredited Mortgage Professionals.
What is really troubling some policy makers and economists is the use of long-term mortgages with little or no equity. No-money-down mortgages “really came out of the gate about five years ago,” and now at least one-third of first-time buyers toy with the option, Mr. De Almeida said. He estimates 15 to 20 per cent of first-time buyers are taking out 40-year mortgages without a down payment.
There is concern that a one-time rise in house prices could result if the bulk of Canadians get into longer-term mortgages, said Douglas Porter, deputy chief economist at BMO Nesbitt Burns.
“Any kind of a shift in lending practices that makes it more affordable for everyone will basically just drive up the price,” he said. “The other concern is that it could be leading to a situation where people are paying a lot more interest over the entire term of the mortgage than they otherwise would, and it could ultimately weaken household finances.”
Canadian consumers as a group could have less net savings down the road because many will still be paying off mortgages later in life, he added.
“UK – OK, you win – go buy something there!:))”
I wouldn’t do that. It’s very over priced at the moment. It’s over priced because it went up a lot, but it hasn’t come down much yet.
Newcomer, I agree…it has come down (I thought that YoY prices just went negative (or close to), I could be mistaken…that said, most anyone who bought in the past couple of years would be cash flow negative on investment properties, so in real terms they are below water now YoY (my estimate) and 7+ months of STRAIGHT DECLINES…so, things are turning down there, but I think that it goes from kinda bad to very much worse to absolute decimation (not literal decimation – worse than that).
“Hard to believe that a few idiots are still out there looking to buy….just when all hell is about to break loose.”
Sad but true. Some friends of ours just purchased and all we could do was shake our heads in disbelief. It was hard to congratulate them when I think it was a huge mistake. $310 for a 35 year old 680 sq ft lo-rise in Mount Pleasant. Parents provided the nominal down payment for them. They have no savings to speak of. Currently in debt with a variety of credit accounts. They are also increasing their monthly outlay by more than 50% over what they are currently paying in rent. Willingly committed to eating canned tuna on saltines for the next decade. Prior to their purchase, I sent them the links to every local housing blog I could. Ignorance shouldn’t be the excuse here…..
True. After all, even the goverment is calling decimation a best-case scenario.
Does anyone have a theory/opinion where the next bubble will be?
1) Tech
2) RE
3) ?
3) commodities
Perhaps in part spurred my moving away from U.S. dollar market quotes, to Euro based quotes…..
What if oil corrects? Won’t that send commodities down? Or will they be driven up by inflation?
Not sure about commodities but currency trading is raging worse than ever. Resource based companies are also a good bet as the far east is demanding raw resources at a steadily increasing pace.
Just looked into my crystal bubble ball.
Fresh water as a commodity & alt fuel infrastructure.
The only craze out there now is money-market funds. How Canadian.
Are RE prices on the Gulf Islands affected yet?
BTW, i’d be short-selling big parking lot operators. Between their prices and Gas, the bicycle is making a comeback.
I ain’t buying anything until:
1. 50 year mortgage
2. 10 percent cash back
3. 2.5 % percent teaser for the first 20 years
4. No principle on payments
5. $100,000 home line of credit
6. Lower rate of interest on my credit cards
7. Lower rate of interest on my car loan
8. Somebody open an RRSP for me
9. Free 40 inch TV set
10. Free vacation to sunny California where the weather is almost as good as Vancouver’s.
Does anyone know the completion date for the W ?? That’s a building to keep a eye on. Can’t wait to see flippers try to move those with a abudance of condo’s/Apt flooding the market.
” Great location within minutes of you next crack fix “
Re: Commodities…
‘Dramatically lower’ commodity prices ahead: TD
TARA PERKINS
Tuesday, May 13, 2008
Toronto-Dominion Bank’s chief executive officer says bankers making loans in Western Canada should do so under the assumption that commodity prices are too high.
TD’s lending standards out West assume “dramatically lower” commodity prices than those that exist at the moment, Ed Clark told a financial services conference in New York on Tuesday.
“A banker should assume that the world financial system is over-inflating commodity prices,” he said.
TD is carefully watching oil service and gas service businesses today, he added.
“What’s interesting is, despite the fact that the West is booming, it’s the only place in Canada starting to show housing price softness, because in fact it is the one place in Canada where housing prices went up too fast,” he said.
What’s interesting to me is a that a short couple of weeks ago a soft Toronto market gets headlines, and today Mr. Clark says the West is the only place softening up in the real estate sector.
I like TD. I own their stock. But it seems that banks consistently release conflicting messages, and they seem to adhere to Ozzie’s approach of predicting often without providing dates.
“We’ve seen an inclination now, a trend, toward longer-term amortizations and smaller down payments, and that is a matter of some concern,” Finance Minister Jim Flaherty said yesterday.”
Yeah, … right!!! If government officials are ever concerned about the state of housing or inflation in general in Canada, we wouldn’t be seeing what we have now, would we? Who approved the 40 year mortgage? Who approved the 0% down with an insurance premium? Who’s mandate is to ensure price stability and low inflation? We are getting the opposite of what they said they would promote. Bunch of liars and losers.
Brittanny Spears { 05.13.08 at 8:50 am } Does anyone have a theory/opinion where the next bubble will be?
1) Tech
2) RE
3) ?
Spears { 05.13.08 at 8:50 am } Does anyone have a theory/opinion where the next bubble will be?
1) Tech
2) RE
3) ?
If you’re the same Brittanny posting here last week, you said you knew what the next bubble was. Why are you asking now?
“But it seems that banks consistently release conflicting messages,”
What conflicting messages? Did TD create the headlines you were talking about?
“…and they seem to adhere to Ozzie’s approach of predicting often without providing dates.”
…Which you don’t do either, because timing is a mug’s game. I don’t know why you would expect banks to do this when you yourself know well enough not to.
WoW: Re Inflation: Yeah, I think if there’s higher inflation, then it will almost certainly result in higher interest rates. However, I think you need to have a pretty dramatic increase in interest rates (or people REALLY on the edge of affordability) to make a difference. A 1-2 percentage point change probably doesn’t matter much. A 3-4 percentage point change might.
Rob: Yeah, inflation isn’t a certainty. Like almost everything else in the world, one should look at the evidence and make a probabilistic guess. I’d say that higher inflation is about 75% likely.
I’d agree with you that stagflation would be a really bad scenario. I have a feeling that this scenario is more likely now than it was a decade ago, too. I think we may be getting away from the deflationary effects of outsourcing to China, and into a world economy where demand for raw materials isn’t just based on what happens in the US. So, a slowdown in the US might not affect the demand for raw materials enough to reduce inflation, which sounds stagflationish.
LA TIMES
California’s foreclosure crisis passed another ominous milestone in April, when more than 1,000 foreclosed homes were auctioned off every weekday at courthouses across the state, the auction tracking firm ForeclosureRadar reported today.
http://latimesblogs.latimes.com/laland/2008/05/foreclosure-flo.html
dingus:
You’re right in that I don’t like to make predictions. You’re wrong that I make a lot of predictions without giving dates, which is what I’m accusing the banks of. I don’t do that. The banks and I don’t engage in the same behaviour. I’m not criticising them for that behaviour, anyway.
I’m pointing out that if someone (you) cites a TD spokesman as a credible expert on the future (which you seem to be doing) you also have to recognize that the bank sends out conflicting messages and does so on a pretty regular basis (that’s not news, is it? I mean, is April a hazy memory for you?)
“In most markets, year-to-date (Jan.-Feb.) sales data were weak, but may have been distorted by poor weather conditions and the impact of the January 1st introduction of the land transfer tax in Toronto that could have pulled sales forward into the end of 2007. As a result, a rebound in the spring may be the cards, but then a renewed moderation should unfold”. Craig Alexander, TD bank economist
“What’s interesting is, despite the fact that the West is booming, it’s the only place in Canada starting to show housing price softness…” Ed Clark, TD.
Wait, which is it? Is Toronto down because of bad weather and LTT, or is it only the West? ‘Cause it looks like two TD messages saying different things. I understand that they have a lot of guys expressing a lot of opinions on a lot of things. That means the odds of conflicting stories is huge, so I’m not criticising TD for being in that position. I’m just pointing out that they are in that position (and so are the other banks, btw).
10%…that’s nuttin…that’s just for starters…come on, get real, eh!:))
Government’s house price fears exposed
House prices are expected to fall by up to 10 per cent this year, a Cabinet minister said on Tuesday, after an embarrassing blunder disclosed the Government’s private fears about the housing market.
Anonymous:
source of the 10% this year?
“Anonymous:
source of the 10% this year?”
This was a UK thing. Apparently a press photographer was able to snap a picture of a memo that a Cabinet member was careless with, showing that the government fears housing price drops.
Hi Jeff – yes, sorry, was UK, should have clarified this.
10% is nothing here – I’m hearing from folks who think its effectively fallen that much here – how do you see it from your vantage point? thank you.
The goverment is inbetween a rock and a hard place now. If they change the 40yr mgt. or get rid of it all together as well as the 0 down B.S. they elimanate a ton of buyers creating a even bigger vacum for inventory to pile up.
Then again if they do nothing they are subjecting themselves to more foreclosures later as well as less spending. As per usual the goverment is so short cited. What people seem to forget is if people are taking 40 yrs as upposed to 25 yrs thats hundreds of thousands of dollars out of econonmy and directly into the banks coffiures.
So what the bank has to ask it self prolong a delisiounal housing market or…. take your medicine now and save a much bigger headache later.
The government doesn’t lend the money. Banks do. The government doesn’t insure the loans – CMHC and private insurers do. And its borrowers who pay the premiums.
Money paid by a borrower to a bank isn’t money out the economy. They keep the delta on the interest, and lend the balance out. They aren’t a black hole: the pay wages and dividends. Its not like they put it on a jet, take it to Zurich and let the gnomes have it.
http://www.bobtruman.com/Weekly_Stats_Update/page_1947259.html
INVENTORY CONTINUES TO BUILD IN CALGARY…!!!!
And who backs the CMHC then ??? Canadian TAX PAYERS
As far as money leaving the economy. Thats exactly whats happening to it. Credit has basically become a globally traded commodity. Hence why were in the storm that were in down south. Nobody is buying up any more of those fantatic loans based on false equity.
Rob, you make it sound like government has nothing to do with the potential problem with housing or economy in general. If that’s the case, why is government concerned or why is government doing things to keep economy up? And while you trivialize government’s role, let’s not forget that many things you do, there are regulations and rules you must follow. When bubble is forming, government and people are happy. When bubble is bursting, government then tries to do things …. things that could have been done earlier.
If interest rate is never as low as 2%, say it’s at 8% for the past 7 years, can you possibly say that our housing price can be still as high as today? And who set the interest rates?
When market is good, give the credit to central bankers, and when market is bad, people that suffer have had it coming because they didn’t act rationally. It’s true but also conveniently missing a side of the story.
Annon:
I’m not trivializing government’s role in anything. I’m saying they don’t drive the mortgage bus. They aren’t even the primary actors. They do have an effect, no question.
“They aren’t even the primary actors.”
If they control credit and money supply, then I say government’s role is by no means small in this mortgage thing. It’s all connected even if people who need mortgage work with banks, not governments.
I am fascinated.
Rob’s daily sales are getting close to 1% of the total inventory. Faster than I expected.
Inventory is up over 8% since the beginning of the month.
This looks like a buyer’s market to me. And moreover, if anything has “turned on a dime” it’s the tone of the conversation in the media.
Garth Turner = wise prophet?
{shudders}
Annon:
Are you telling tht Stephen Harper tells Mark Carney or Ben Bernanke what to do?
Are you telling me that 40 year mortgages were some sort of gevernment program as opposed to a new lending product devised by a competitive lender and adopted by Canadian banks?
Same question with regard to mortgage insurance. Who drove the process? Lenders, insurers or the government?
All I’m saying (and its in response to Lost in Van’s comments) is taht the market does just about everything that is a)not prohibited and b) potentially profitable. That’s where this stuff came from. It wasn’t a government plan.
awum:
You and I are both seeing it. Late last month the news was “Inventory is up 25%” ; now its up over 30%. More price reductions than sales.
But, is it a buyer’s market? If so, I’m glad I’m not a buyer. Would you buy now (as opposed to making a trade)? If not, do you really think its a buyer’s market? We’ve said that sell/lists consistently lower than 50% are a buyers market, but now that we’re getting there, do we stick by that? Don’t we want to see a return to mean, or fundamentals, or something?
Its not a buyers market, its a smart sellers market and a fools buyers market….when the smart sellers are joined later by the desperate/panicked sellers and the foolish buyers decide to run for the hills…then the real fun will begin….these are just the opening credits, sit back – enjoy the show.
If the 40 years mortgages work out the banks cash in. If it does not work out ……
“That’s where this stuff came from. It wasn’t a government plan.”
Great. And if/when the ‘private’ institutions that overextend themselves end up in trouble, to whom do they go crying looking for a bailout. (cough–bear stearns–cough).
Beyond that, Rob, the feds through CMHC are implicitly subsidizing mortgages.
You seem to strike this ‘I am a manly capitalist and y’all are a bunch of whiny socialists’ stance now and then.
Me, I like capitalists fine. I just like better the ones who use their own money and not implicit/contingent government subsidies.
Here’s a deal: Rob.If, by July 1, 2011, there has not been a major fooferaw about CMHC or the Bank of Canada then I owe you a virtual beer. If on the other hand, a fooferaw has arisen, then you owe me a virtual beer.
Yes, July 1 2011 is a long way away. But we bears are nothing if not patient . . .
Did someone post this already?
“Lenders deserve to suffer, Buffett says”
http://seattlepi.nwsource.com/business/361744_berkshire05.html
“there has not been a major fooferaw about CMHC or the Bank of Canada “***
***I mean a fooferaw related to CMHC needing to be bailed out by the feds because its equity cushion has evaporated due to mortgage defaults, or a fooferaw about the BoC providing a big ‘liquidity’ bailout of Canadian financial institutions hurt by housing misadventures.
If the housing is to correct to a minimum of 20%, how much will Canadian banks lose due to foreclosures? And if that’s the case, how much price reduction is in for Canadian bank stocks? Any takers?
Its not a buyers market, its a smart sellers market and a fools buyers market….when the smart sellers are joined later by the desperate/panicked sellers and the foolish buyers decide to run for the hills…then the real fun will begin….these are just the opening credits, sit back – enjoy the show.
Amen brother… I got my popcorn and skittles and sitting in a balcony seat for this one should be a blockbuster…
Disbelief – you will love how the movie ends, just fantastic – its not really a cliffhanger, but I love a happy ending! Its going to be fantastic. Lots of blood sweat and tears to, some violence, but mostly like an age-old story of fear and greed, and castles in the sky. A classic.
Just remember, as far as the banks are concerned, Vancouver’s a small market most of the way across the continent. Most of the rest of the country didn’t go nuts bidding up real estate the way we did on the wet coast. The banks may very well make out just fine, with the exception of their westcoast holdings.
…Or maybe it’s going to become a full-on US situation where it turns out that everything got way out of hand and there’s losses across-the-board…
There’s a profound sentiment that those who take 40 year amorts are people grasping at their limit of affordability. Actually, they may very well be starting off with the full expectation that they have it as bad as it can get with respect to the longevity of their debt, but given a reasonable future, can foresee a time when they can add $ to the payment and bring the period of the loan down to 25 years…or less. Its just that they may be unwilling to completely give up lifestyle for the time being. Moreover, 40 years is a long time…good for a cycle or two. Who cares if there’s a 5 year contraction.
Ya Ceejay, and who cares if they have to sell (moving up, death, divorce, moving) and end up with hundreds of thousands of $ in negative equity? Ya, that sounds like fun!
VHB:
You’re on. I’m speculating and going by memory, but since private insurance has entered the market I think taht CMHC’s exposure has been reduced along with their market share. Seems o me that if I were a politician faced with bailing out CMHC so that they could pay out the big, bad chartered banks (doesn’t everyone hate those guys?) and letting the bank take the loss, I’d let the bank take the write down in return for a vague promise about mergers, but that’s just the cynic in me
You bring up an interesting question, however: what’s the size of sub-prime paper bought by Canadian charterd banks compared to their hi ratio mortgages?
I am not striking the “Me Tarzan, the rest of you whiners Jane” stance. LiV was laying more blame at the government’s feet than I think is warranted. Follow that thinking through. Does that mean I think the market will solve all problems, and in essence is perfect? Obviously not. I think the blame for the potential problem should be more properly laid at the feet of the lenders and insurers. I’m getting tagged here for trivializing government and being an archetypal capitalist, so let me turn the tables: why are you tivializing the roles of the lenders and those big bad American insurance companies? What are you? Some kind of socialist/capitalist whiner? (OK, tongue now removed from cheek).
I’m led to believe thta one of the reasons that AIG and Genworth got so involved in Candian mortgge insurance was because (surprise surprise) the governments “implicit” subsidization of home ownership through CMHC was actually a cash cow based on raping the borrower through a government insurance monopoly. You probably ahve a better undertanding of it, but i the end we agree, I think: I can’t see a real role for CMHC as an insurance provider in this day and age.
Hmm… if it’s not a “buyer’s market” and sellers aren’t moving much of their product, so it’s not a “seller’s market” either… then what do we have? A “waiter’s market”? A “heightening sense of tension” market?
I agree — I wouldn’t buy. Too many signs pointing in the other direction.
ceejay:
You are, of course, right, that many looked at 40 year mortgages as simply a way to get in. They generally plan on a combination of 1) accelerated paydown, 2) eventual reversion to 25 year amortization, 3) increased wages as they move up the pay ladder and 4) increasing values. 1 -3 are more or less borrower controlled. 4 is up for grabs, but the long term outlook is better than the short term.
The downside? WoW nailed it. Its the must sells combined with a market drop. You can’t sell if you can’t clear title. If a 40 year was affordable you can probably rent it out and move. If a 40 year was a killer you’ll probably die on the vine.
Re: post 56. “INVENTORY CONTINUES TO BUILD…!!!”
AND (if you look) PRICES HIGHER THAN EVER.
Sigh. I’m not the next SATV, people, but I don’t see this market going the way of the US. Declines, yes. Crash..Naa. For a huge variety of macroeconomic reasons. The only plausible big one would be a crash in commodities….and the resultant job loss. Not gonna happen too soon though. Our rising $$ has protected us from inflation. Crashing commodities would reduce inflationary pressure. So it won’t be an interest rate hike that takes the wind out of the sails either.
More’s the pity…
awum:
That’s exactly what I’m driving at. If you can’t sell for $200, and I won’t buy for more than $100, we’re looking at lower volumes until one of us has to move or decides to buckle. How long will that take? I know that some people think that prices will plunge just because they’ve been high, but I’m still skeptical about the “Prices have plummetted! Let’s sell your house!”
Thanks, Rob. WoW, you’re right. But nobody young foresees dying or divorcing. Odds are against the former…but increasingly high for the latter. Maybe only singles should qualify for a 40 yr amort
And a move up is generally not a forced-play.
Now we just have to figure out how to settle the short/long position in virtual beers . . . wait, here is a site! Ain’t the internets great?
Maybe only singles should qualify for a 40 yr amort
Be sure you buy a condo next to an eligible single! That way you can knock a wall down, double your space and raise kids. Won’t have to realize losses on the condo that way
Have Canadian banks learned much from the U.S. experience that continues to unfold with disastrous consequences?
Do Canadian banks know what is going on south of 49?
Do Canadian banks have a safety plan if those 40 years babies do not work out?
Does the Federal government understand that qualifications for mortgages here in Canada are getting thinner and thinner?
Do they understand that if BOC lowers their rates more, it will not really help because the mortgage game of lowering rates is over?
Do they understand that since 80-81 the lowering of interest/mortgage rates was a great game while it lasted?
Welcome to the K Wave.
holy cow… 38 listings at Elan.
What is so wrong with that building?
Jeff; holy cow… 38 listings at Elan.
What is so wrong with that building? From my experience with that building most owners are speculators and have another primary residence.
ceejay,
The only plausible big one would be a crash in commodities….and the resultant job loss.
Are you talking about BC’s economy? Because if you are I suggest you pick up a newspaper every couple months or so or have a listen to the old radio. BC’s number one commodity (excluding mj and condos) has crashed hard and sees no sign of recovery until the housing market turns around in the US. Mills shutting down every week or so, forest operations shutting down, established logging companies going bankrupt… job losses are happening right now. So tell me again why we won’t see a US RE scenario play out here?
Rob, the market is good, as you’ve mentioned many times. Given this, are you surprised that we have not seen a wave of buying to attack the growing listings. I know your phone is ringing, but do you think its just yours? Cause sales are dragging. Wierd, eh? You’d think with the mythical benchmark climbing, folks would be clamoring over themselves in search of it…I gave up looking for it once I realized it exists only in the subjective minds of the realty board.
Interesting times.
TD – just wait (as I know you are) for the construction jobs to wind down – that is when the sheet will really hit the fan. It is going to be spectacular.
why is everyone selling?
Rob Chipman,
People who are living at their homes will not sell unless they can no longer can afford the mortgage. Which is very likely by the way, given the high service ratio.
The market is going to crash because the flippers are going to rush out of the market. Flippers generally have limited cash flow to service their obligations. Renting out their unit will not cover their expense. Once the future gain that justified the unreasonable premium is gone, no longer will people be willing to pay an unreasonable premium. The buyers know it and the seller knows it. Holding on their unit will be the worst thing they can do.
Secondly, the same crazy reason why people think R/E will keep going up will have the flip effect. People will believe that the R/E will not recover. At least not any time soon anyways. This will result in people accepting the fact that R/E will not boom in the next couple of decade.
In addition, there is such thing as opportunity cost. Think about it. Will Nortel shares trade again at $120. Maybe. Maybe in 50 years. At the meantime, it makes more sense to accept your loss and invest whatever is left and better your position. Same goes for R/E. Accepting your loss is the best thing to do and move on.
“why is everyone selling?”
Because everyone believes that it is the top, that from here on out, there will only be a plateau, moderate gains or even a slight pull back. In other words, everyone believes that there is no point waiting anymore. In other words, because they are not motivated to hold. When that changes, and they become actively motivated to sell, people will stop buying.
why is everyone selling?
the hold for appreciation scenario has just come undone….
My coworker + (wife, 3 young kids) is selling his 3bed townhouse in poco, pocketing his ~120K gains and renting a house. He looked at buying in North Van, but a similar townhouse would cost him 70% of his net income AFTER putting the 120K down. That’s for 25 years. He did the math on the 40 year mortgage… enough said.
Funny thing is, he has always been very bullish on Van RE and we’d always get into the typical arguments. I think even he can’t deny that something stinks.
THOSE WHO DON’T SELL FAST WILL GET HURT!!!!!!!
SELL NOW WHILE YOU STILL CAN.
ONLY A FEW COUPLE MORE GREATER FOOLS LEFT
Jeff, great question. That is THE question. Rob – what are your thoughts – why are so many folks selling and fewer buying? (I know your phone is ringing off the hook, but look around you – not everyone’s is).
Jeff, you caught the trend early. Do you think, as I do, that once the masses get a sense of the sea change, the real rush to the exits will begin, and buyers will disappear? How do you see this playing out? We can ask Rob his opinion after it happens.
Paul’s numbers are out, very bullish
36% sell ratio……..LOL
DT(674)+FN(227)=901 Listings
Lots of choice out there.
Jeff, Rob has lots of buyers, phone is ringing – this inventory will get soaked up, market has not changed, prices still going up (mythical benchmark), folks who thought the market was going to cool last year missed out on massive gains….LOL
Ha ha ha….I am loving this. Just incredible.
Jeff, I betcha two pints of beer that your area reaches 1,000 within 30 days…
markethascracked
Bubbles can keep on growing until…..Rob’s phone stops ringing!:0
Hey Tony D…Volare.
Oil…gold…wheat…uranium…Nickel…copper…Iron Ore…coal…water (water?)…Canola…Natural Gas…Diamonds…Potash….with the exception of Forestry, resource industries are making a killing. Canada has what the world craves. Much of these are in BC. Sectors will get nailed, no doubt. But the planet is on the biggest commodity binge ever. That has got to mitigate the effects of a US recession. I realize that if construction declines then Canda, and especially BC will take a hit. But there is tremendous wealth being generated in this country. I have no idea what the offset it..but I suspect it is considerable.
Let’s not forget the Giant Squid
ceejay:
was all that nonsense sarcasm? do you really think the Canadian economy is healthy?
I look forward to watching various Olympic infrastructure projects complete. What do we do with the workers once they are done (and all the condos they bought?)?
Jeff – you get it. I know that. Still, I love hearing it – what do you see unfolding over the next 36 months?
After the big O I believe the construction on social housing will begin in a big way. The construction people will be begging for employment and they’ll accept 50 cents on the dollar wages. Down where I live by the George Wainborn park there are multiple chunks of land in between the $800 per sq ft condos that is all designated for social housing. Huh… imagine what that’ll do for the neighbourhood… lol.
The next 36 months will be very ugly. 50% drops in most areas of BC. 20% drops in most areas of Ontario. And it should be bottoming out in about 3 years.
>Jeff { 05.13.08 at 8:43 pm } wrote:
>why is everyone selling
Because it’s a rush for the exit. Cash out while you can at the top.
Unfortunately, the exit is only so big. Not everybody will get out.
Capital expenditures for construction by sector, by province and territory:
http://www40.statcan.ca/l01/cst01/busi01k.htm
Housing is huge. Number 2 and with a rocket is Oil, NG, and Mining.
Hardly nonsense, Jeff. It will mitigate. Will it prevent a decline in housing…probably not. Will it help prevent the US experience…likely. Canada simply has more going for it at this point in time.
Wow. Just wow.
Is anybody here surprised yet?
I kissed off hundreds of thousands of dollars between 2004 and now by sitting it out. The meltdown (arriving) is late. There will be no bottom.
Does anyone have a theory/opinion where the next bubble will be?
1) Tech
2) RE
3) ?
Bubbles? There will be no more bubbles.
You can buy a liveable house in Detroit for $650 (six hundred and fifty dollars). You can buy a lot for $100. Historic mansions can be had for a couple of hundred $K.
“You can buy a liveable house in Detroit”
I beg to differ.
Newcomer { 05.13.08 at 10:49 pm }
I beg to differ.
my mistake – $625
Next bubble: green industries. Has already started.
Does anyone think recreational properties will decline as much as residential properties? ( Boomer demand and all ya know)
I am seeing more listings on my usual route to my kid’s school and one price reduced. Keep em coming. I will just keep my cash in GIC and oil/gas/gold stocks for now. I just hope there won’t be any earthquake while I am still renting in Richmond.
Does anyone think recreational properties will decline as much as residential properties?
a lot of recreational property purchases were leveraged from primary residences that had gained equity, with this new paradigm of stagnant or falling prices that will change. So there will be less demand for second homes, what this does to existing values is still hard to call but i would think prices will drop.
this is something new. an auction with no minimum bids on new condos in parksville. being held at the river rock:
http://www.news1130.com/news/local/article.jsp?content=20080514_112133_3712
Does anyone think recreational properties will decline as much as residential properties?
a lot more.
UK inflation woe ’set to worsen’ – The outlook for UK inflation has “deteriorated markedly”, the Bank of England governor Mervyn King has said.
Government figures on Tuesday showed that the rate of consumer inflation reached its highest level in 13 months driven by high food and fuel costs.
Mr King said inflation would probably stay above the government target of 2% for two years, hampering the economy.
He added that house prices were set to fall further, though no one could be certain how far they would decline.
Second homes of the stars
Lifestyles of the rich and famous
LAUREN SHERMAN Forbes.com
May 13, 2008 at 4:15 PM EDT
Under the impression that, in daily life, stars are the same as everyone else? When it comes to buying a second (or third) home, it seems that they more or less are. Like lesser-knowns who can afford multiple properties, celebrities buy second homes to get away or to make a little extra money in real estate–or both.
“Just like other wealthy people, money managers were advising celebrities to park their money in real estate up until about a year and a half ago [when the market started downward],” says Mark David, editor of celebrity real estate site The Real EStalker…
http://www.theglobeandmail.com/servlet/story/RTGAM.20080513.re-forbesSecondHomes-0513/BNStory/RealEstate
Oil…gold…wheat…uranium…Nickel…copper…Iron Ore…coal…water (water?)…Canola…Natural Gas…Diamonds…Potash….
Sorry, which of these are produced in BC in significant quantities? I thought we were talking about BC here, what are the effects of a commodities boom on BC when we produce little to none of the above? Better yet how does this support your position that RE won’t crash in BC? You’re better off with the Olympics, the mountains and rich Asians.
Today’s Province (Money Section)
B.C. Mining:
2006 – $2.3 Billion
2007 – $1.2 Billion
( – 48% )
Dunno if I’d put money in that sector.
Large chains and small stores are being forced to close as demand slumps amid the housing slowdown.
By Peter Y. Hong, Los Angeles Times Staff Writer
May 14, 2008
…”As prices come down, people see their house less as a place they’d like to invest thousands of dollars,” said Laura Champine, who follows the furniture business for investment firm Morgan Keegan. “It seems like this is the deepest downturn since the early 1980s, maybe longer.”
http://www.latimes.com/business/la-fi-furniture14-2008may14,0,6770934.story
[...] 14 May 2008 · No Comments Things are changing in Vancouver RE markets. Inventory is climbing, and we seem to have crossed an important psychological threshold. Bulls are starting to acknowledge that price pullbacks may be possible. Some are acting on that realization. This from exx at Rob Chipman’s blog 05.13.08 at 8:55 pm – [...]
WoW:
“Rob has lots of buyers, phone is ringing – this inventory will get soaked up, market has not changed, prices still going up (mythical benchmark), folks who thought the market was going to cool last year missed out on massive gains….LOL”
-I don’t have lots of buyers. I do know how to get stuff sold, however.
-My phone is not ringing with buyers. Truth be told, I always have plenty of people to communicate with, and don’t concentrate on buyers, but my front end staff can confirm that phone call volume is down.
-I’ve explicitly questioned whether this inventory will get soaked up, and wondered whether the under-construction inventory we have will be absorbed. The larger the number becomes, obviously, the harder it is to absorb.
-”Not all prices dropped last month”is not the same as “Prices are still going up” – I said that benchmark flatlined, average for the whole REBGV went down, and medians by area went up (15 instances) and down (19 instances).
-Point of fact: people who held off buying last year (say in April) have missed probably 8%. Whether that’s massive or not depends on how leveraged you are and whether you successfully cash out now. I don’t recommend short term buys/trades anyway, so I don;t really need to address that further.
You weren’t implying that I had said any different, were you, WoW?
You weren’t, wait, what do they call it?…spinning again?
Why is everyone selling? Um, I hate to point out he obvious, but being grounded in the market makes you a realist, so here goes: you can’t have sub 40% sell/lists and slowly declining sales if everyone is selling. The fact is that not everyone is selling. Wanting to sell at X price isn’t the same as selling. Seling determines market value. Wanting to sell at a huge profit does not. Right now we’re waiting to see if either side wins the battle of wills. Will buyers pay what sellers want, resulting in everyone selling? Will sellers accept what buyers want to pay, resulting in everyone selling? Or will buyers and sellers continue to disagree, to one extent or another, resulting in lower sales volumes, and not everyone selling?
Meanwhile, for a smart guy you’re either missing a hell of a good game or tossing me a nice lob (works out the same, so thanks): I’ve told everyone, repeatedly, to price things sharply for a sale. I’ve appraised the current market very accurately (even if I’ve disagreed with others when speculating about the future) and recently racked up several sales in what some would call adverse circumstances. How can you say that Jeff has caught the trend but I haven’t? (Serious question – I’d love to see your reasoning).
Anonymous 8:49:
Thanks for explaining it so clearly to me. The problem is that your explanation isn’t new, and its validity isn’t proven. At the same time it seems reasonable. Result: several years of market watchers saying “How, in the face of logic, can this market continue to behave in a way that seems irrational?”
-People living in their homes now have historically low interest rates on their mortgages, and the majority of them got into this market years ago. It is a minority of mortgagors who are under a great deal of pressure. If rates go up substantially, or if their earning power drops substantially, that minrity will be in trouble. Do we foresee either a bad economy with a drop in wages, or increased interest rates without inflation? Your answer to that determines how likely you think widespread foreclosure will be. Still, its not a new thought. We’ve been wrestling with it for years (see VHB’s Mortgage Gap – a truly great contribution to the blogosphere).
-You’re making some unsubstantiated assumptions about flippers. We’ve had 6 years of pre-sales and great appreciation. The fact is that many flippers have lots of cash, and many have already left the market. Of those who remain, their debt servicing demands already exist. The either recover costs through rent or they don’t. If they don’t, they’ll either continue to bleed and take the tax write off or sell/get foreclosed. If they sell they either make a profit because they bought early enough, or they lose money (which might be set off against earlier profits). In other words, your large number of exposed flippers is probably smaller than you think. As always, late entrants who can’t hold will get burned.
I do agree with you that psychology will turn 180 degrees. I’ve seen that happen before. 4 years ago we recommended many buys, and got about 50% buy in. Common objection? “Forget it! This market is about to crash. Don’t you remember ‘82?” I’ve observed this market for many years. I know psychology will flip. I suspect that the result will not be an unending spiral downward. We’ve never seen that before. Why would we see it now? (usual caveat about a negative external event).
Opportunity cost and accepting a loss is an interesting concept. The first challenge with o/c is: where is the next opportunity. You see people ask that question here repeatedly. The other challenge is that o/c requires comparison. Comparison implies roi (meaning return “of”, not return “on”); for some people, clearly, a 5% per year return on a leveraged investment that carries itself is preferable to taking a chance on something else – maybe not for everyone, but certainly for some.
In short, your explanation does have some validity, but its open to a lo of criticism which it has failed to answer for several years now. Will time prove you right? Probably to one degree, but I doubt that you’ll score 100%.
Rob -
Depends on how you define a “plunge” I suppose.
I have a friend who recently put a property on the market for about $650K, which their realtor advises is a good price, deliberately set on the low side of comparitive recent sales because of the currentlylarge amount of competition for buyers where the home sits. She bought not that long ago for about $480K, and she privately tells me (1) she wishes she’d listed about six months ago when she first thought about it, but (2) she’ll be happy so long as she walks away with at least $550K.
Assuming the realtor’s comment about pricing is honest, this is a seller who privately expresses a willingness right now to accept something 15% below recent prices. I don’t think she’s nuts either; she wants to move and she’s happy to take away as much of that profit as she can. She argues, too, that if the market drops the same way where she’s moving, what has she lost anyway?
I’m aware that this is one person expressing an opinion casually; not hard evidence. Still, I dunno, is 15% a “plunge”? It would erase about 18% in gains.
Frankly, I don’t think a 15% to 20% drop is outrageous or even unlikely. Imminent? Well, let’s see…
awum:
The Realtor can be honest but still be off on values (I’m not saying he is, but he could be). Your friend should have a good enough relationship with the Realtor to say “You say its worth $650,000; I’m happy with $550,000. Why aren’t we selling it right now for that much? You sell me, now, on that question”.
I’ve had recent sellers tell me similar things. I say “Its worth X” and they say “I’ll take X minus 35%, because that’s still a huge profit, and I have another opportunity I want to pursue over here”. I have to then evalute the goal triad :best price, least amount of time, minimum of inconvenience. My guys aren’t inconvenienced, usually, so that isn’t an issue. It comes down to time and price. Going back to your friend, I’d say “Look, you’re flinching, which might be wise, but you’re over-doing it. Relax, find the panic button, and refrain from hitting it. $650,000 is a good price if (and this is hypothetical) our prime goal is best price. If you want out, however, we’ll get this gone for $625,000. Through poor communication (your fault or mine, who cares), I was led to believe that you wanted top dollar. After all, I presented data, gave you my opinion, but you choose the list price (and I always let sellers choose list price). Now that we have motivation cleared up, let me make you an extra $75,000 over what you’re happy with and get you out of a market you don’t want to be in”.
Its worth remembering that the 15% plunge is 15% off a list price. She bought for $480,000 not long ago. If she sells for $625,000 she’s made 30%. I don’t know what “not long ago” means, but 30% implies 2-3 years, all things being equal. If its less than that the $650,000 is probably unreasonable.
Who cares what she leaves on the table if the place she’s buying also drops? To ask the question is to answer it, right? She should know what she wants now, and know the price. Her agent should be getting her inside those places now so that they really know what’s up (find the panic button and refrain from hitting it). Then, use that info to get top dollar for her current place (defined as the most you can get right now), and then take advantage of 30%+ increase in inventory to improve her position. If the market has already dropped 5% from a peak (say 650 was peak, dropping 5% means 625 is an alright LP, perhaps), and she drops price 15%, we’re talking dropping $100,000 when a drop of $32,500 was enough to do the job. That means she has to make up $67,500 on the buy to break even (again, all things being equal). Why dig that hole?
You can imagine, if a seller expresses that opinion to me casually I’ll be on it like a dog on a bone. You can’t say on the one hand (as I do) that real estate is a huge and important investment and then on the other treat it casually. I’ve said for a while that this is a bad market to invest in and a tough market to trade in. Your example puts meat on the bones of the trading challenge.
Rob, you make some great points. Then you kind of don’t. You are a superb communicator, I will give you that. Incredibly skilled.
So – do you think that prices one year from now will be higher or lower than today?
thank you.
U.S. house prices fall
Vancouver Sun
Published: Wednesday, May 14, 2008
BOSTON — Housing prices fell in two-thirds of U.S. cities in the first three months of the year as a rise in foreclosures depressed property values and home sales tumbled 22 per cent, the National Association of Realtors said. The median price for a single-family home fell in 100 of 149 metropolitan areas studied by the Chicago-based real estate trade group. Home sales, including single-family houses and condominiums, dropped to 4.95 million at an annualized pace from 6.36 million a year ago, the group said in separate reports Tuesday. The U.S. median home price was $196,300 US in the first quarter, down 7.7 per cent from a year earlier.
If I buy now and in two years RE goes down, can I sue Jim Flahrtey for saying that canadian RE will not go down like in the US ?
Heres a intresting stat to watch for. Watch how many realtors will start qutting when things go bad. I remember a stat when things were bad we were down to somewhere around 5 thousand realtor’s now were around the 15k mark. Its a great sign of how the market performs. The guys that outlast the good and bad times are some of the true professionals in the industry.
Rob do you have those stats I remember them being posted a few years back. It was quite a amazing stat.
When things go good everyone and there dog jumps in thinking they can sell realty. Pretty easy when all you do is put up a sign and receive 20 offers. When it gets dire the good ones stick it out while the bad ones return to there starbucks jobs.
WoW:
Its not a bad thing to be a good communicator, so thanks for the compliment. Its aslo not a bad thing for me to not buy your POV lock stock and barrel.
You ask a lot of questions (which is fine) and you ask the same question a lot of times (which is also fine), but you have to answer a few just to keep things fair.
Me first. Do I think prices will be lower a year from now? No way to be sure, so I won’t go out on a limb and give a definitive, one size fits all answer, but the risk that they will be increases daily.
Your turn: what good points do I make, and what great points do I kind of not make? And, how can you say I’ve missed the current micro-trend when I say “price sharply to sell under these adverse circumstances”, especially when my approach is rewarded?
Rob, I think you make great points. If anything, you might just be a little too close to the situation to see the potential volatility or softness of recent (say, last couple of years) price gains in the market. My friend will probably wait a bit, but start talking to her agent in a few weeks if there is no activity (and I hear there has been very little interest — much to my surprise, her property is a gem as far as I can tell) depsite the fact that her agent insists the pricing is pretty “sharp.” Nobody wants to be the fool who sells too low, but nobody wants to be the person who misses the opportunity to escape with a decent profit either.
I think you’d probably agree that a drop of 5% or so (maybe even 10%?) from peak values could take place with little effort in a fairly brief time. It’s a scale thing as I see it though. The history of speedy price increases themselves have drawn first-time buyers into the market at higher rates and higher prices than any sane person would have expected. That fuel is, I think, running out as we watch. What sales activity we are seeing is more “trading” between existing owners than a continuing influx of new buyers (and the new buyers that are still showing up, we know, are doing so on shakier and shakier grounds).
There’s no more reason to discount the idea of seller’s accepting lower prices than there was for buyers accepting higher ones, once the market has shifted in their favour. Stubborn “sellers” are irrelevant to the setting of selling prices, as much as “buyers” who weren’t willing to pay the going rate. In this market, the idea that sellers have any chance of winning a waiting game is just silly — the enormous gap between rent and buy means there is no level playing field.
Prices may not be in mid-plunge just yet, but I do expect losses, and significant ones at that. And my guess is quicker than expected.
LiV:
We’re at 9,700 for REBGV right now. 6,604 in July of ‘01. That doesn’t count FVREB.
Rob
Thanks for the info. That will be a great stat to watch. I know of so many P/T realtors. Just hilarious as they consider themselves experts in a feild they have only been in for a few years.
BTW Rob keep up the great work. Your insight is much appreicated. I don’t alway’s agree with your opinion but great to have a professional putting it out there and standing behind it.
things are changing:
on the ‘other” blog Cam Muir is being touted as Vancouver Mayor….. go figure
also making a non fat venti caramel machiatto is not all that difficult…. you just gotta apply yourself.
Awum… I couldn’t agree more…
Rob… Thank you so much for hosting this discourse and for your valuable inputs/assiduous metrics maintenance…
Wow… Was fun seeing where you’re coming from (your recent biopic) and although I might hesitate to agree with you viz. magnitude of coming ‘correction’ I always enjoy your posts…
EventHorizon is heading for the hills/wine country for the next few days and a welcome break from blogs/research…
Cheers everyone…..
I’m aware that this is one person expressing an opinion casually; not hard evidence. Still, I dunno, is 15% a “plunge”? It would erase about 18% in gains.
Frankly, I don’t think a 15% to 20% drop is outrageous or even unlikely. Imminent? Well, let’s see…
Hi Rob,
Thanks for keeping the blog rolling and replying to your posters taunts and questions like no other blogger I read (with patience to boot!).
Your arguments seem sound on the surface and you’re nothing if not a great debater. The problem I have with your arguments (and some of the great bulls of Vancouver RE) are to what are your claims/predictions/investments/gut feelings grounded?
Let me frame this from a point of reference:
I work and associate with many skilled/successful career investors who specialize in varied sectors (none in RE though except as amateurs). One thing that all of these professional investors have in common is an innate knowledge of the fundamentals that support their investment convictions, to the extent that it’s possible to quantify the fundamentals. They take baths when either they get the fundamentals wrong or when they can’t afford to wait out the psychology of the masses. They make a killing when they get the fundamentals right or when the psychology of the masses race ahead of the fundamentals. And most of them make an income at all times from their investments due to dividends or rents for the more exotic product. Obviously these are not traders or arbitrageurs.
Since I don’t know anyone that is a professional RE investor I’m puzzled when I read your claims (paraphrased) that “RE may “correct” 20%” but that anything more than that is very unlikely etc… The only fundamentals that I know of that affect RE in the long term (believing that all RE is local) are a local population’s wages, and immigration. Seeing that local wages have been relatively stagnant throughout the RE run up of the last while, and immigration has only kept steady what is there to keep our RE prices from reconnecting to local wages and immigration? What type of price changes would be required to bring things back into historical alignment? Would you be buying investment properties after a 20% correction assuming all else remains equal? Were you or your more experienced investor clients buying “20% ago”?
I’m not trying to open a debate with the above post, or to put words in your mouth or whatever. I’m just looking for some answers and trying to get a handle on the professional RE investors psyche.
Rob, great answers, as always, and yes, my comments on your communications skills are a compliment. That said, look at PaulB’s comments – no need to read between the lines with his, I have difficulty understanding many of yours. Your good at what you do, hopefully you help buyers pay as little as possible and help sellers get as much as possible, which is your craft, I believe that you probably do just that.
Awum:
“I think you’d probably agree that a drop of 5% or so (maybe even 10%?) from peak values could take place with little effort in a fairly brief time. ”
I do agree. How could I not? Average SFH price of $920,000 in February; $880,000 in April. Dif of $40,000. That’s almost 5% right there (mind you, $810,00 in December ‘07).
“There’s no more reason to discount the idea of seller’s accepting lower prices than there was for buyers accepting higher ones, once the market has shifted in their favour. ”
Yes and no. I think its a little easier for sellers to say yes to more money and no to less than it is for buyers to say no tho higher prices, but motivation (whehter its “I need to sell”or “I can sell at the low price and still make a ton”) is the real issue. We’re going to see how that plays out. On one extreme use me as an example: offer me three times what I paid for a property and I might sell. Offer me twice what I paid and I’ll hold. Threaten to walk away and I’l say “Who cares”? Are there more guys like me on the way down than there are buyers who said “I’m sitting this out” on the way up? Maybe we’re equal in number. But, add in price drops combined with people being able to pay mortgages. That means late entrants can’t sell without reaching in the pocket for additional cash to clear title, but can afford to pay the mortgage. That means there’s more selers who say “Forget it; I’ll just keep the damn place!”
I’ve said correction sooner than later, and correction is 20% at least. 20% is significant, especially for late entrants. Therefore, when you say significant pain sooner than later, I think we’re on the same page.
Rob, great, you say correction sooner than later (like now is sooner than tomorrow, so I think its starting now) and that 20%+ is your definition of a correction – so I might be able to pick up a $2,000,00o west side decent home for $1,600,000 soon…but I think that even with JUST a 20% correction, astute buyers will be able to find something that is 10% below FMV (ie. in a hot market some buyers (many) will ‘overpay’, and in a panicked market some sellers will ‘dump’ to clear the property). I’m counting on you to find me that deal.
Rob, I think you underestimate the “owner’s fatigue” we will see at the lower end of the market — meaning all of those FTBs who squeezed into no $ down, 40 yr mortgages, thinking that I can stick with this girlfriend, living in this shoe box for a year ortwo…worst that can happen is we break up, sell the place and split the proceeds….
Well, with no appreciation, in a no money down and a 40 yr term, you are underwater as soon as you try and sell after only a year or two, just on transactions costs. These are not suites where “non-involved” people can share, they are TINY.
There will be many that want/need to sell for personal reasons who will be slammed by a 10-20% correction, plus paying your commission (which you will have worked hard to earn in this market that is getting a lot tougher to move product in)…..plus, what about all the investors whose revenues on properties bout in the past 2 years, do not cover carrying costs….and the yare not seeing any capital aprreciation today to make up for that?
I think the market could have a soft landing as you imply you believe (not sure that you do, but you ar not in the business ofscaring people!), but I think it could also see some scorched earth…and the low end of the market changes, will work their way up the food chain to the pricier stuff…..
My 2 cents — the inventory growth here and in Calgary are quite astonishing……
Other R/E markets that topped out did not have the skimpy qualifiactions for mortgages that we allow now.
On the other hand, I see that a Canadian bank has taken a writedown on U.S. student loans. Weird.
Rob, you say:
“Yes and no. I think its a little easier for sellers to say yes to more money and no to less than it is for buyers to say no tho higher prices,”
I think you are fundamentally mistaken on this one — which is rare.
Nobody ever has to buy, so long as renting is an option. But, in a market where rents are lower than carrying costs, owners who cannot live in a place for whatever reason (death, divorce, moving, etc.) have to sell or bleed. If they don’t have the cash flow to cover the bleed, they have to sell. Their hand is truly forced.
As you point out, prices are set by actual transactions, not asking prices. Therefore, in a down market, in which selling appears difficult and unattractive, prices are set by the translations for homes owned by just these sorts of people whose hands are forced. Buyers are never ever forced in this way.
We can, thus, conclude that market prices are set by buyer sentiment, and not by seller sentiment. We can also conclude that it is a little easier for buyers to say no to more money and yes to less than it is for sellers to say no to lower prices.
watching – “scorched earth” – I agree, but slower burn…the average man and woman on the street is not even aware of the building inventory/slowing sales…all they have know for years and years and years is that RE goes up and is a great investment.
We need greed to turn to fear. This will not happen until RE bad news is on the daily news/papers on a daily basis for weeks…if not months….I believe its coming, but its not hear yet – we are still setting the stage. But watching, I agree with your comments.
Newcomer:
I think the “yes and no”is important. Have to sells suffer in falling markets. No question. But volumes also fall in most falling markets, because need to sells aren’t the majority in rising markets.
Does death, divorce or transfer mean “need to sell”? Not always. Over the years I’ve picked up many management agreements from deaths and transfers when renting is preferable to selling, from a seller’s pov. At the same time, I’ve had family expansion be a huge “need to buy”for a buyer (what’s the alternative? Sell the small house and rent? Good move in 2004?). To say renting is an option in that case under calculates the cost of rent, I think.
Do buyers determine price? Do sellers? My answer, based on seeing price get determined many, many times, is still “yes and no”. Your points are valid, nonetheless.
WTM:
If they’re in with 0% down, and suffer fatigue, and want to sell, but are underwater, how do they clear title?
You know my feelings on investors who can’t hold long term.
WoW:
As long as we agree that “soon”might be a year or two. Remeber, RE is long term, and 5 years is overnight.
TD:
Good question. I’m going to answer it later – gotta hop now.
wow: the average man and woman on the street is not even aware of the building inventory/slowing sales…all they have know for years and years and years is that RE goes up and is a great investment.
But the average man/woman on the street is not a RE speculator. If I look at my own neighbourhood, on my block alone are probably 5 houses where the people have lived there 20yrs+ and have no mortgages, and don’t really care about watching the market daily (hourly?) because they like where they live. I’m sure it’s different in condos, but just looking around my SFW west side neighbourhood, i don’t see a bunch of flippers with beads of sweat and a shaking finger over the ejection button.
Rob, I am not sure what they will do:
1) Mum & Dad bailout, and then years of finger wagging?
2) go into debt for the difference?
3) walk away, possibly bankrupt?
Anyone who has gone through a breakup knows any of those solutions beats being cooped up with the “evil ex”….
hahahaha, seriously though, these are where the horror stories will come out, that the “get in before you are priced out” buyers really did not think through what buying that property meant if the market runs out of steam…and I do think there are a LOT of those in this town, my opinion…..others, like my folks who have their WV house listed now, absolutely do not have to sell. Last time they listed, many years ago, they could not get their price and decided to stay put. Their house is now “worth” hundreds of thousands more on paper….but, they are now in their 70s and really do want to sell. Staying through another cycle is not an option they see as practical for them at this time…..so, at some point in the coming months, I believe they will sell, remains to be seen what they get for it….
“But the average man/woman on the street is not a RE speculator.”
And so these guys can be ignored for our purposes. If they are not going to buy or sell, they are not part of the market and their knowledge, inclination, etc. are neither here nor there.
Thomas – you should come to my street (avg selling price $3.8MM), and look at the “Price Reduced” red stickers…they look like SOLD stickers till you get up close and read them….and they have been sitting and sitting and sitting…I’m convinced they are rich Chinese owners (most folks in my area are Chinese, and not the ones born here) who live elsewhere…perhaps one day they will get fed up with sitting on $3.8MM of money that is tied up and has high carrying costs (even if they paid cash) to continue to own, and say to heck with hit, sell it at whatever and let’s move on..it does happen…
Sounds like we live close to each other, but I guess I’ve been missing the red stickers. I’ll have to slow down.
Though, it’s an interesting point generally. The thesis seems to have been that the deterioration would be from the outside in, ie Maple Ridge first, Shaughnessy last. But if the people in Shaughnessy are generally more financially aware, maybe they’ll sell first.
New Record…I love new Records! Its different here though.
Folks – watch for a new record again soon. And then another one. And so on and so on.
Breaking News from The Globe and Mail
Homes market flooded by sellers
LORI McLEOD
Wednesday, May 14, 2008
Home sellers flooded the markets in Toronto and Saskatoon last month, causing listings to surge to a record level in Canada.
The number of resale home listings rose by 17.7 per cent in April from the year before to 67,554 units on an unadjusted basis, according to data released Tuesday by the Canadian Real Estate Association (CREA).
Unit sales dropped by 6.1 per cent from the year before, but edged up by 0.8 per cent compared with March, on a seasonally adjusted basis.
Listings rose by a whopping 121 per cent in Saskatoon from the year before, the biggest increase of any city. They rose by a more moderate 18 per cent in Toronto. While this gain was seventh on the list, it has an impact because Toronto usually makes up about 18 per cent of national sales activity on the Multiple Listing Service (MLS).
The number of homes on the market was down in just three areas for which data were available: Kitchener-Waterloo, Newfoundland and Labrador, and Thunder Bay.
The news comes on the same day as a report suggesting two-thirds of Canadians are either negative or neutral about the prospect of buying a home right now.
Asked whether it was a good time to buy a home, one-third of those surveyed as part of a report by the Canadian Association of Accredited Mortgage Professionals (CAAMP) said “no,” one-third said “yes” and the rest were neutral. The response was similar to that in CAAMP’s last survey, which was done in the fall.
Residents of Saskatchewan, where home prices have continued to skyrocket despite a cooling trend in much of the rest of Canada, appeared to be most leery about the idea of buying a home. Seventy per cent said it was not a good time to make a purchase, compared with 60 per cent last year.
In 2007, the average price of a resale home in Saskatchewan rose by 32 per cent compared with the national average increase of 11 per cent, according to data from CREA. This year, the average home price in Saskatchewan is expected to rise by 19.5 per cent to $208,400, the highest year-over-year provincial gain in Canada and well above CREA’s forecast national average increase of 5.3 per cent.
Sticker shock in regions where prices escalate in a short period of time can sink consumer sentiment quickly, CAAMP chief economist Will Dunning said in an interview.
“Gradual change people can deal with, it’s sudden change that people get thrown by,” said Mr. Dunning, who wrote the broader report on the housing industry that was released with the survey.
However, in a strong economy, the state of the labour market appears to be more important to Canadians than home affordability, Mr. Dunning added. Jobs also trump concerns about the broader state of the housing market, including fallout from the subprime mortgage market in the U.S., he said.
“What really matters is job creation, and how people feel about their own personal job situation. If people are comfortable there, they’ll find a way to work with the affordability situation in their community,” he said.
“If you start feeling threatened in your job or your neighbour gets laid off, then your opinion will change very rapidly.”
Atlantic-Canadians were the most positive towards a home purchase, according to the CAAMP survey, with 49 per cent saying it was a good time to buy compared with 24 per cent who said it was not.
Unit sales last month rose the most in Newfoundland & Labrador at a 27 per cent gain over last year, followed by Saint John at 18 per cent, according to CREA.
Sales fell the most in Calgary and Edmonton in April with drops of 31.2 per cent and 25.4 per cent respectively.
Mr. Dunning also said he expects to see a levelling off in the adoption of newer products including longer-amortization and zero-down payment mortgages.
“We had this spike in housing markets across the country in the middle third of last year. I’d say that was largely consumers entering the market because of the new products,” Mr. Dunning said.
“We’re seeing that activity come down from that peak, suggesting those products aren’t having the same impact they were last summer.”
Thirty-seven per cent of home buyers took out mortgages with longer amortizations than the standard 25 years in the period from September, 2006, to September, 2007, according to CAAMP’s most recent data.
In a survey last month, Re/Max released even more striking numbers, suggesting almost two-thirds of Canadians had adopted longer amortizations, which go as long as a 40-year term.
Data in the CAAMP report were obtained from various sources including an online survey of 2,058 Canadians carried out during the first half of April, 2008.
18% is nothing…we must be up 50-60% in some parts of the GVRD now – Rob, what do you think – is this the sign of a strong market or one that is in the process of a correction (as defined by a 20%+ drop in PRICE).
Lovely.
” In a survey last month, Re/Max released even more striking numbers, suggesting almost two-thirds of Canadians had adopted longer amortizations, which go as long as a 40-year term. ”
The Single biggest reason the housing market hasn’t stalled yet !!!
Canada’s version of the SUBPRIME
Newcomer: I wouldn’t go so far as to say that Rob is “fundamentally wrong” but I think I agree with your point. I think potential buyers (even the average Joe, provides he reads a newspaper now and again) do see the following:
- more “for sale” signs
- no more line-ups at new condo developments
- inventory rising across the country
- RE price growth expectations shrinking (possibly reversing)
- rent is a screaming deal compared to ownership costs
- home price losses in other markets (US, UK…)
All of which makes it increasingly difficult to find motivated buyers ready to pay current, let alone higher, prices. Especially now, there can’t be that many buyers who HAVE TO buy. Meanwhile, the increasing inventory and the gap between rent and ownership costs means there will be an increasing number of sellers who HAVE TO sell. The two forces, in my view, work together to create quicker change than you might otherwise expect. In my opinion, that’s what left the jaws on the floor in the US. I expect it to happen here
Rob, Disagree with you on the “have to buy”. I have friends, early 30s, renting a 1BR condo in NV for $1100 a month, just found out baby on the way…..combined income >$200K. They are going to wait at least 18 more months, save more in the meantime, and hope to pay $100-200K less for a SFH in North Van at that time, than they would now….I think it is a sound strategy, I guess time will tell!
Silence
Jeff: silence from Rob?
I think he indicated he was off to do something…er, productive (unlike me apparently hahahahaha!)….
silence on the sales front.
price reductions are running rampant because sellers are not aware of the current market conditions.
no showings = price reductions
“Canada’s version of the SUBPRIME”
And, according to the article it helped boost the market for one quarter. I guess we will see how much longer such a product can support the market and how many buyers are willing to own about half a house after 25 years of payments (depending on down payment obviously).
I think that you may be surprised at how many homeowners will be left swimming naked. There are plenty of homeowners who have jumped in with both feet to take advantage of the wealth in their homes ( Your richer than you think… advertisement). With helocs to buy condos and big cars and lending money for their kids to buy into this market. I think all this overspending is a ticking timebomb waiting to blow up in a lot of unsuspecting faces…
awum:
I’m beginning to share your optimism. For the first time in I don’t know how long, I looked at listings in my area, and there were some non-crackshack options that were only double my rent. And there were actually a few of these. If only a few sell decently below list, as your friend would be ready to do, then we are in a new ballgame for sure.
Think of what this looks like as
a) condos complete inflating supply (see Mohican’s astounding graph on that score)
b) Olympic, infrasturcture and construction projects complete, and the construction based economy moderates and
c) the Olympics approach, come and then go, and Vancouverites realize that having the Olympics doesn’t mean bolts of rainbow hued light blaze from our butts foreverafter.
Silence
….the day the phone stopped ringing…..
wow: “the average man and woman on the street is not even aware of the building inventory/slowing sales…all they have know for years and years and years is that RE goes up and is a great investment.”
Well I did my part to save a RE shopper last night. The ditzy realtor & her serious sidekick asked if I would fob them in the elevator (their fob wasn’t working) – “it’s okay, we’re realtors” she says. I replied that I was always happy to help realtors – the sarcasm was only a tad thick. The poor sucker -em I mean propsective RE Millionaire -said I was helping him too to which I replied “Not a very good time to be buying real estate is it?” He sheepishly looked at his shoes. C’mon it was two on one and clearly the guy needed a lot more help than my fob could provide! I thought a simple serious query the responsible thing to do under the circumstances (or I was just being mean to the realtors, yah, actually, probably that).
Oh, You could have heard a pin drop for the rest of that elevator ride.
I wonder what the effect of a “It’s not a good time to buy real estate” poster campaign would be. A couple of thousand tacked up around the city might get the dinner table conversations going.
“Oh, You could have heard a pin drop for the rest of that elevator ride.”
Probably because you broke social norms by talking to people in a confined space they couldn’t escape from. They didn’t say anything to make sure they didn’t prompt more dialogue from the crazy elevator talker.
Ya, all-time record high for number of listings in Canada….watch for MOI numbers to spike upward….Can you hear the train? No?….that’s funny, I can see it plain as day.
more like, talking about real estate in a negative way in this city makes you a social pariah to most, especially realtors and their prey…oops, I mean FTBs…. is like talking about venereal disease…. makes them squirm
Hey dingus, kudos for bringing a huge smile to my face when you referred to the prospect of slumping house prices as “optimism.” Thank you for that.
Probably because you broke social norms by talking to people in a confined space they couldn’t escape from.
same thing happened to me, except i farted……so i just looked down and said “Bad Dog!”
Of course it’s optimism! Imagine, people only allocating a reasonable portion of their paycheques to shelter and who no longer see a life of debt peonage as the only option.
I mean, wouldn’t this city be so much more livable?
Lower property prices. It’s a good thing.
see two brand new still under construction typical 33×122 homes for sale in point grey for $1,688k. comparable homes were pushing $2MM i believe not that long ago.
Just answer to everything,” Ya but Vancouvers different.”
It really works, uh ……. RE is falling everywhere but here….Ya think Vancouver is different? J. A$$.
Sydney Austrialia
-Beautiful Weather
-The Olympics
-No more land
-Strong Economy
-Strong Immigration
Sound like Vancouver? All except the weather.
Their own newspaper the Daily Telegraph refers to their property market as a “blood bath” Sometime ago for no discernable reason, buyers stopped showing up. Prices starting dropping and have dropped every month since then. There are areas of Sydney that are down 50%!!!!
Everyone said that it couldn’t happen and if it did there would be a reason. Well there was a reason, buyers simply refused to pay higher prices. The bubble started to deflate and it still does today. Yes, it has be exhasperated by rising interest rates lately but it was simply a buyers strike. Things just got out of hand.
People have been talking about the Vancouver market declining for a long time but the time is now. It has happened before and it will happen now. Syndey gets worse and we are simply 18 months behind.
Once the average realtor gets their head out of their a@@ they will run for cover! (NO offense to Rob who is not an average realtor)
This market is DEAD!
I believe it was Bob Rennie the king of criminal pumping who said “If the blogger is right then 1000 people are wrong” Guess what Bob, the blogger was right and 500,000 people are wrong!
Mc Lovin
Sounds like good times in Van.
Note on the “zero sales in Pt. Grey” comments I made a week or two ago, I looked at the stuartbonner.net site again and there were indeed plenty of sales, they’re just posted 2-3 weeks after they happen (presumably they stay on the “for sale” list until the subjects come off, then are retroactively listed as “sold”) So, the Pt. Grey market isn’t dead like I claimed (a little knowledge can be a dangerous thing), there were maybe 12-15 sales in April, maybe a few more will show up. With an inventory of 72, that’s a mere 5 mos of inventory.
Inventory is up, though, from 20 properties in January to 72 today. A solid 260% increase, and growing!
Thomas (comment 180) those two houses are on the corner of 16th, so knock off 1 or 2 100K for starters, and ya hafta figure for a presale they price it low and if you want the standard gold-plated mudroom hooks etc. you throw in a bundle more?
Again, Whybuywhenucanrent?
** Forecasting a 50% drop in Van area RE prices by 2012 **
McLovin – c’mon. The variable rate in AU is 9.25% More than double that of Canada. 500K from ING = 2657/mo (25 yr amort). In Australia, its 4222/mo. That’s why people aren’t buying.
Glad its different here….
New Zealand April House Sales Fall to 16-Year Low (Update1)
By Tracy Withers
May 12 (Bloomberg) — New Zealand house sales slumped to a 16-year low in April and prices fell from the year earlier for the first time in almost seven years, adding to signs record- high interest rates will slow economic growth.
The number of homes sold dropped 45.5 percent to 4,464 last month from 8,194 a year earlier, according to a report today from the Real Estate Institute of New Zealand Inc. e-mailed to Bloomberg News. Sales were the lowest since December 1991.
A cooling housing market follows a report last week that companies shed the most workers in 19 years, adding to signs economic growth may have stalled in the first quarter.
Ceejay,
You can get a variable rate at 8.50% there. I agree this is a long way from the rock bottom rates we have here. However, it is important to note that their market started dropping before rates went up.
Imagine what Vancouver will do when rates start to go up? Or will they stay here forever because we have no inflation. (That is if you take out food and gas we have no inflation)
There is no doubt that higher (I say that becuase there have been a few periods in Vancouver history where 8.50% is not high) interest rates have added fuel to the fire but it was not what killed it.
Overpricing, affordability and speculation killed Sydney. Sound like any place that you know?
McLovin
“I wonder why you bears celebrate if the market falls.
You cannot buy property during a crash, since it is harder to get financing.”
Let me get this straight….now bulls are telling us that there won’t be any buyers to stop a falling market???
Keep up the good work Alum, but be careful not hurt yourself.
Interest Rates – Jeffery Rubin (great economist) of cibc is calling for higher interest rates next year.
wow. 188 comments ! I don’t know about the real estate market, but there seems to be a spike in posts. The vultures are circling. Blood! Blood!!
Victoria Blog:
REALTOR DISHONEST ALERT:
Don’t believe what you read when you see “new listings.” I’ve seen an increasing number of properties pulled off the market and relisted at lower prices, apparently in an attempt to hide the fact that the property sells well below the original asking price. For example:
202-2710 Grosvenor (2BR in Hillside):
Feb 12 2008 listed at $315,000
Mar 12 2008 re-listed at $299,900
Apr 1 2008 re-listed at $289,900
On April 14 the property sold for $282,000. Looks like it sold for 2.7% under the asking price, after 11 days on the market, right? Well, no, actually it sold for 10.5% below the original asking price after two months on the market.
One word comes to mind: “slippery”
- awum (too lazy to log in)
May 13, 2008 4:39 PM
[...] from Anonymous at Rob Chipman’s blog 05.14.08 at 2:43 pm [...]
“Probably because you broke social norms by talking to people in a confined space they couldn’t escape from. They didn’t say anything to make sure they didn’t prompt more dialogue from the crazy elevator talker.”
LOL! Too funny!
Anecdotaly, out here in White Rock there’s for sale signs littering the streets… Loads of ‘Price Reduced’ & ‘New Price’ stickers popping up.
New Zealand has cooled down a lot. We’re in Wellington, and growth has stalled along with listings at record highs.
We’re thinking of moving out of this market – once interest rates get over 10% it will get very expensive.
Sellers are so oblivious! OMG I need a new career… what is so wrong with these sellers? Don’t they want to sell?
They don’t get it. Reduce your price and lets sell your property. Do you actually want to still be holding it when it is worth less?
damn you guys are obsessed!!
Obsessed? paul says 16714!!!!
who us?
I kinda like the 27% (SFH) and 35% (condo) sell/list ratios.
May is traditionally the strongest month and we’re likely sitting at sub40% for the month so far.
Ouchee.
DT(671)+FN(228)=899 Listings
Rob – it is time. Time for you to admit that I, along with several bears, were (and are) right. At least you can admit that we are finally right (perhaps in the same context of a broken clock twice per day – but right we are!:))
Stick a fork in it, its done. CANDADA, as a country, is at an ALL TIME RECORD high in total listings.
Rob – is the REBGV at an all time high for listings? I think FV is now…
Sales – are they slowing? (ie. are listings now starting to grow not only to new listings but reduced sales?).
Jeff, use the fear factor to drive sellers to the exits – quickly.
Still, I imagine its going to be tougher in your industry for a while – but as the ranks thin over the next 3 years, those that last should do just fine – best of luck.
We’ll grab that beer at 2,000 – or perhaps before.
Wait till they start using terms like “Ice Cold” or “Frozen like a cat in a deep freezer” or something like that…wait for that….then wait some more….then wait again….then buy…
Breaking News from The Globe and Mail
Red-hot housing market loses its heat
LORI McLEOD
Wednesday, May 14, 2008
As a flood of sellers sent home listings to their highest level on record last month, at the same time sales slowed as wary buyers remained on the sidelines.
This shift in dynamics suggests a marked change is taking place after the frenzied bidding wars that characterized the country’s housing boom, providing good news for buyers who want to make less pressured purchase decisions.
I like this Michael fellow – good analogy….
Michael said…
“The housing market doesn’t respond immediately to swings in employment and it takes people time to react to changes in personal circumstance,” said association chief economist Will Dunning. “Even if recent forecasts are right and the labour market in Canada should start to weaken, momentum from past job creation should result in continued strong housing demand well into 2009.”
Hahahahahahahahahaha! Continued strong housing demand well in 2009! What a joke! “Experts” like these remind me of those cartoons when the roadrunner or whatever runs off a cliff. First, the creature stays in the air in place with just its legs moving. Then after a few seconds, he plunges straight down.
Right now, Van housing prices are staying steady in mid air, but the market has gone off the cliff, and gravity will soon take prices back down to earth.
May 14, 2008 10:44 PM
WoW:
I am not sure when we’ll hit 2000, but I think we will.
Let’s get a beer and chat about it then.
Betcha North Van total listings go from 885 right now to over 1,000 in the next 30 days.
Sellers have caught wind – somehow they have figured this out (or started to) and are now hitting the sell button….testing the market…whatever….nervous?
Jeff – are sellers getting nervous at all? Or do they really follow what is happening in any great detail?
Could you see realtors sitting in one of the 17,000 open houses this weekend, with few or no visitors coming through, or pure lookeeloos (like me!:)), thinking what the f’k am I going to do, I told the seller we’d have some offers, maybe multiple offers, by 6 pm tonight – can you see this scene play itself out? What does it look like?
Once again, I wish YOU the best, and glad that you’ve had some sales – you will do fine, but there is turbulence ahead….
Jeff, please advise:
Why doesn’t Mr. Rennie just ramp UP his Marketing System – he has a system, so why is he not using it to get all the inventory gobbled up?
I have 4 dead listings. They suck. And 1 new listing that I am open housing this weekend.
One of my sellers is so scared that he’s dropped from $599k to $524.9k
Jeff – why do the 4 suck – its always good to have listings, you never know….?
Seller who reduced – smart…he’ll thank you later.
In west side, I’m hearing of reductions in the hundreds of thousands (one for 1.5mm reduced to 1.2MM after no offers and desperate sellers – loads of folks ‘moved up’ to the westside…lets see what a few months does to the ‘price reduced’ population here….
Jeff – whats next?
I have never worked so hard in my life. I thought Real Estate was easy. I do so much to persuade my sellers to reduce and they meet me half way with half ass reductions. I’m getting 1 or 2 showings on these listings each week and the buyers have so much choice that my overpriced listings don’t stand a chance.
Well, eventually some of them will sell (the right buyer comes along or the seller reduces) and you’ll get paid…stay in the game during the tough times, may hay during the good ones I guess…
the thing about condos is they are practically a commodity (similar, so if there are 20 units in the same blg for sale – its price that is the key differentiator)…your sellers will figure it out eventually.
Good luck Jeff, things will no doubt be very tough for you guys until the sellers figure out what is really going on and either de-list and sit on the sidelines, or lower prices to get the deals done. Hopefully things will start to shake out sooner rather than later…..
deals are getting done on well priced properties.
One of my sellers is so scared that he’s dropped from $599k to $524.9k
lol Jeff… I’ve been following that listing.
I’m sure it’s different in condos, but just looking around my SFW west side neighbourhood, i don’t see a bunch of flippers with beads of sweat and a shaking finger over the ejection button.
FWIW I have noticed a lot more new basement suites in my hood (PG near Byng) and from some of the convos I’ve had with my neighbours and acquaintances who’ve put in new suites they are basically in a rent out or die scenario (one guy on my soccer team said if he misses more than a months rent from his two suites he’ll be screwed). A lot of these folks received early inheritances or no interest loans from their parents to get into their places in the early 2000’s.