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tdma800
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Re: How far can it drop? 20% or 30%?

Wed Aug 10, 2016 3:51 pm

There aren't firearms or other weapons pointed at most associates, kids, and so on forcing them to stay. In addition, there is so much envy dripping from people leasing and renting lol. Only a certified bleep would buy a place not expecting it to go up. Cheap houses aren't everything, except to the renters
 
VanLord
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Re: How far can it drop? 20% or 30%?

Wed Aug 10, 2016 7:21 pm

 if property prices just do what they have always done over the long term, that is roughly track inflation, no more and no less. 
I don't believe this is a correct statement in Canada, especially Vancouver.  If that were the case based over the last ten years, assuming a 2% inflation rate, we would be due for about a 60% price drop.  
Also I can't deny Vancouver is in a bubble, but you can't say this is exactly the same as Tulip Mania.  Tulip Mania was based on tulip bulbs, while Vancouver is consistently rated as one of the best cities in the world, it has seen steady population growth, with continual improvements in infrastructure, and a shrinking world with global trade that has elevated Vancouver's status since Expo.  I'm not saying its perfect, but there are many reasons that have helped Vancouver grow at a pace better than inflation and you can't say it is completely based on hype in the same way that pretty flowers were hyped up and escalated in price in the 16th century.   
 
reallyreal2
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Re: How far can it drop? 20% or 30%?

Thu Aug 11, 2016 7:19 am

yah well Vancouver is closer to tulipmania than it is to tracking inflation.  Make all the justifications you want but at the end of the day, it's a market used to park money at the top end of the market (plain and simple).  Seriously, what industry does this city have other than a network of realtors, mortgage brokers, plumbers, drywallers, electricians?  
 
tdma800
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Re: How far can it drop? 20% or 30%?

Thu Aug 11, 2016 7:24 am

 if property prices just do what they have always done over the long term, that is roughly track inflation, no more and no less. 
I don't believe this is a correct statement in Canada, especially Vancouver.  If that were the case based over the last ten years, assuming a 2% inflation rate, we would be due for about a 60% price drop.  
Also I can't deny Vancouver is in a bubble, but you can't say this is exactly the same as Tulip Mania.  Tulip Mania was based on tulip bulbs, while Vancouver is consistently rated as one of the best cities in the world, it has seen steady population growth, with continual improvements in infrastructure, and a shrinking world with global trade that has elevated Vancouver's status since Expo.  I'm not saying its perfect, but there are many reasons that have helped Vancouver grow at a pace better than inflation and you can't say it is completely based on hype in the same way that pretty flowers were hyped up and escalated in price in the 16th century.   
Those that are educated know that its difficult to find an empty apartment or home to rent, and Vancouver is considered a slow, sedate society. True foreigners consider it a very slow place to make money, in industry and housing as well.
 
eyesthebye2
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Re: How far can it drop? 20% or 30%?

Thu Aug 11, 2016 9:25 am

 if property prices just do what they have always done over the long term, that is roughly track inflation, no more and no less. 
I don't believe this is a correct statement in Canada, especially Vancouver.  If that were the case based over the last ten years, assuming a 2% inflation rate, we would be due for about a 60% price drop.  
Also I can't deny Vancouver is in a bubble, but you can't say this is exactly the same as Tulip Mania.  Tulip Mania was based on tulip bulbs, while Vancouver is consistently rated as one of the best cities in the world, it has seen steady population growth, with continual improvements in infrastructure, and a shrinking world with global trade that has elevated Vancouver's status since Expo.  I'm not saying its perfect, but there are many reasons that have helped Vancouver grow at a pace better than inflation and you can't say it is completely based on hype in the same way that pretty flowers were hyped up and escalated in price in the 16th century.   
the comment is dripping with naivety. If real estate prices tracked inflation then Calgary real estate would be worth 2x Vancouver. In fact, worldwide there would a leveling of prices so one city would not be markedly different than another. Clearly this is a brain fart theory based on wishful thinking
 
eyesthebye2
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Re: How far can it drop? 20% or 30%?

Thu Aug 11, 2016 9:28 am

yah well Vancouver is closer to tulipmania than it is to tracking inflation.  Make all the justifications you want but at the end of the day, it's a market used to park money at the top end of the market (plain and simple).  Seriously, what industry does this city have other than a network of realtors, mortgage brokers, plumbers, drywallers, electricians?  
don't underestimate tourism and it's effects on real estate prices. Works pretty well for Paris, Manhattan, Rome etc.
 
VanLord
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Re: How far can it drop? 20% or 30%?

Thu Aug 11, 2016 9:44 am

yah well Vancouver is closer to tulipmania than it is to tracking inflation.  Make all the justifications you want but at the end of the day, it's a market used to park money at the top end of the market (plain and simple).  Seriously, what industry does this city have other than a network of realtors, mortgage brokers, plumbers, drywallers, electricians?  
I would argue that for the most part Vancouver is completely different than tulip mania, but more accurately comparing it to the housing crash in the US.  If the market were to crash here, would that cause a complete meltdown of the financial system?  No it would not.  First and foremost our laws are different and when a person goes underwater on their house they can't simply walk away and turn the keys over to the bank.  They are still the owners of the house and the bank can force them to sell to recover their assets, but the bank won't be left holding a big bag of flaming turds like in many parts of the states.  Not to mention the sub-prime mortgage fraud, that doesn't exist here, or maybe it does on a very minor scale, but it won't result in the near collapse of our banking system.  Perhaps our banks will take a hit on their earnings for a few quarters, but it won't kill the banks.  In fact it would open up a buying opportunity for bank stocks.
As for the local economy, since when are skilled trades people not considered valuable resources and get paid accordingly, as long as the population of the world keeps growing, these resources will be needed and paid well for their services on a global basis.  If Vancouver goes to hell, they will still have skills that can be used elsewhere.  Yes we could do with less Mortgage Brokers in this world, and if it gets really bad, people are still going to need their Starbucks, so you can always fall back on that!!!
I also have been in the Corporate sector for 20 years in Vancouver and see a lot of diverse industries with lots of well paid, steady white collar workers.  No we may not have the head offices that Toronto has, but we have healthy corporate sector here, whether you  believe that or not.  Vancouver has a fairly diverse economy with lots of different businesses...Definitely not reliant on one resource like Calgary.  I also have a young relative who just graduated with a nursing degree and had no problem finding a great paying job, with good benefits, a pension plan and basically a good job for life.  Yes I have told her to hold off on buying a place, but she has found a decent rental and is saving for a down payment.  If I only I was in that position when I was 22.
Meanwhile the beat goes on for me...Housing prices can crash, they can accelerate to the moon, they can stay the same, it doesn't really matter.  In the next ten years I will collect about a million dollars in rental income (at current rental prices, which I have largely kept the same over the past 10 years), this money will have continued to pay down the mortgages that I have, while Inflation will have reduced the real value of the remaining mortgage debt, and increased the rent that I am able to receive.  Interest rates may go up, but that's ok too, that increases the write-offs for me.
so this so-called false economy can keep on faking it, because Vancouver will be just fine.  I'll bet in ten years housing prices will be higher than they are today, and if not I'll go double or nothing for another ten years after that. 
 
 
Fabien
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Re: How far can it drop? 20% or 30%?

Thu Aug 11, 2016 10:09 am

For all its many flaws, this forum was prob. one of the 1st places to identify that something really unusual was going on in this housing market.

That was 5 or 6 years ago.  Then, with action Van may have had a chance. After years of political and pseudo-intellectual scorn and denial, as Eyes points out, the $ rises may have been too great - the damage to this city, affordability and the millennial generation may be done.

Can I also point out that we have to stop talking in one or other terms, black vs white, local vs foreign terms. Of course local expectations and greed based on the International liquidity factor is part of the picture. Why are people so determined to separate them? They have never been mutually exclusive. The opposite in fact.
 
reallyreal2
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Re: How far can it drop? 20% or 30%?

Thu Aug 11, 2016 1:21 pm

yah well Vancouver is closer to tulipmania than it is to tracking inflation.  Make all the justifications you want but at the end of the day, it's a market used to park money at the top end of the market (plain and simple).  Seriously, what industry does this city have other than a network of realtors, mortgage brokers, plumbers, drywallers, electricians?  
I would argue that for the most part Vancouver is completely different than tulip mania, but more accurately comparing it to the housing crash in the US.  If the market were to crash here, would that cause a complete meltdown of the financial system?  No it would not.  First and foremost our laws are different and when a person goes underwater on their house they can't simply walk away and turn the keys over to the bank.  They are still the owners of the house and the bank can force them to sell to recover their assets, but the bank won't be left holding a big bag of flaming turds like in many parts of the states.  Not to mention the sub-prime mortgage fraud, that doesn't exist here, or maybe it does on a very minor scale, but it won't result in the near collapse of our banking system.  Perhaps our banks will take a hit on their earnings for a few quarters, but it won't kill the banks.  In fact it would open up a buying opportunity for bank stocks.
As for the local economy, since when are skilled trades people not considered valuable resources and get paid accordingly, as long as the population of the world keeps growing, these resources will be needed and paid well for their services on a global basis.  If Vancouver goes to hell, they will still have skills that can be used elsewhere.  Yes we could do with less Mortgage Brokers in this world, and if it gets really bad, people are still going to need their Starbucks, so you can always fall back on that!!!
I also have been in the Corporate sector for 20 years in Vancouver and see a lot of diverse industries with lots of well paid, steady white collar workers.  No we may not have the head offices that Toronto has, but we have healthy corporate sector here, whether you  believe that or not.  Vancouver has a fairly diverse economy with lots of different businesses...Definitely not reliant on one resource like Calgary.  I also have a young relative who just graduated with a nursing degree and had no problem finding a great paying job, with good benefits, a pension plan and basically a good job for life.  Yes I have told her to hold off on buying a place, but she has found a decent rental and is saving for a down payment.  If I only I was in that position when I was 22.
Meanwhile the beat goes on for me...Housing prices can crash, they can accelerate to the moon, they can stay the same, it doesn't really matter.  In the next ten years I will collect about a million dollars in rental income (at current rental prices, which I have largely kept the same over the past 10 years), this money will have continued to pay down the mortgages that I have, while Inflation will have reduced the real value of the remaining mortgage debt, and increased the rent that I am able to receive.  Interest rates may go up, but that's ok too, that increases the write-offs for me.
so this so-called false economy can keep on faking it, because Vancouver will be just fine.  I'll bet in ten years housing prices will be higher than they are today, and if not I'll go double or nothing for another ten years after that. 
 
Rental income or rental revenue?  Big difference.
But in all seriousness, there is no money in Vancouver outside of RE.  Everyone can pretend about a friend they know about that has a decent job but in reality, your nursing grad will never own a detached home in Vancouver.  If that's the city you want to live in, no problem.
Either way it makes no difference to me.  Vancouver is a dull city for the most part - unlucky for me, I have roots in the city so moving is not a viable option.
 
tdma800
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Re: How far can it drop? 20% or 30%?

Thu Aug 11, 2016 1:27 pm

yah well Vancouver is closer to tulipmania than it is to tracking inflation.  Make all the justifications you want but at the end of the day, it's a market used to park money at the top end of the market (plain and simple).  Seriously, what industry does this city have other than a network of realtors, mortgage brokers, plumbers, drywallers, electricians?  
I would argue that for the most part Vancouver is completely different than tulip mania, but more accurately comparing it to the housing crash in the US.  If the market were to crash here, would that cause a complete meltdown of the financial system?  No it would not.  First and foremost our laws are different and when a person goes underwater on their house they can't simply walk away and turn the keys over to the bank.  They are still the owners of the house and the bank can force them to sell to recover their assets, but the bank won't be left holding a big bag of flaming turds like in many parts of the states.  Not to mention the sub-prime mortgage fraud, that doesn't exist here, or maybe it does on a very minor scale, but it won't result in the near collapse of our banking system.  Perhaps our banks will take a hit on their earnings for a few quarters, but it won't kill the banks.  In fact it would open up a buying opportunity for bank stocks.
As for the local economy, since when are skilled trades people not considered valuable resources and get paid accordingly, as long as the population of the world keeps growing, these resources will be needed and paid well for their services on a global basis.  If Vancouver goes to hell, they will still have skills that can be used elsewhere.  Yes we could do with less Mortgage Brokers in this world, and if it gets really bad, people are still going to need their Starbucks, so you can always fall back on that!!!
I also have been in the Corporate sector for 20 years in Vancouver and see a lot of diverse industries with lots of well paid, steady white collar workers.  No we may not have the head offices that Toronto has, but we have healthy corporate sector here, whether you  believe that or not.  Vancouver has a fairly diverse economy with lots of different businesses...Definitely not reliant on one resource like Calgary.  I also have a young relative who just graduated with a nursing degree and had no problem finding a great paying job, with good benefits, a pension plan and basically a good job for life.  Yes I have told her to hold off on buying a place, but she has found a decent rental and is saving for a down payment.  If I only I was in that position when I was 22.
Meanwhile the beat goes on for me...Housing prices can crash, they can accelerate to the moon, they can stay the same, it doesn't really matter.  In the next ten years I will collect about a million dollars in rental income (at current rental prices, which I have largely kept the same over the past 10 years), this money will have continued to pay down the mortgages that I have, while Inflation will have reduced the real value of the remaining mortgage debt, and increased the rent that I am able to receive.  Interest rates may go up, but that's ok too, that increases the write-offs for me.
so this so-called false economy can keep on faking it, because Vancouver will be just fine.  I'll bet in ten years housing prices will be higher than they are today, and if not I'll go double or nothing for another ten years after that. 
 
When others are leasing your place, the types of money coming in are the same. There are so many high paying jobs it isnt funny.  Especially in the medical field.  However, entitled people that everyone should be able to buy, not rent a cheap house.  The most happen part of them all is that nobody is forcing anyone to stay. LOL
 
Geyser
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Re: How far can it drop? 20% or 30%?

Thu Aug 11, 2016 1:57 pm

eyesthebye2:
 if property prices just do what they have always done over the long term, that is roughly track inflation, no more and no less. 
I don't believe this is a correct statement in Canada, especially Vancouver.  If that were the case based over the last ten years, assuming a 2% inflation rate, we would be due for about a 60% price drop.  
Also I can't deny Vancouver is in a bubble, but you can't say this is exactly the same as Tulip Mania.  Tulip Mania was based on tulip bulbs, while Vancouver is consistently rated as one of the best cities in the world, it has seen steady population growth, with continual improvements in infrastructure, and a shrinking world with global trade that has elevated Vancouver's status since Expo.  I'm not saying its perfect, but there are many reasons that have helped Vancouver grow at a pace better than inflation and you can't say it is completely based on hype in the same way that pretty flowers were hyped up and escalated in price in the 16th century.   
the comment is dripping with naivety. If real estate prices tracked inflation then Calgary real estate would be worth 2x Vancouver. In fact, worldwide there would a leveling of prices so one city would not be markedly different than another. Clearly this is a brain fart theory based on wishful thinking.

I respectfully suggest that the "brain fart theory based on wishful thinking" is a description better applied to your delusional views.

Despite having even more short-term volatility than real estate, gold is widely recognized as a similarly effective long-term hedge against inflation.  Here is a graph which may help overcome your difficulty in understanding the effects of inflation:

http://pricedingold.com/charts/Homes-18 ... s-1890.pdf[/img]
You also appear to have either forgotten or failed to understand the lessons from history which I have previously posted, so here is part of the New York Times commentary on the Eichholtz study on long-term house prices versus inflation.


http://www.nytimes.com/2006/03/05/magaz ... .html?_r=0
The most surprising thing about Eichholtz's study is that it contradicts a maxim of the real-estate profession. "There is a myth which says that real-estate values go up significantly over time, and that this is especially true for central city locations," Eichholtz said. "When I began to study the Herengracht, I didn't know what I would find, but the data ended up challenging that myth."

That is to say, where everyone from your wise old uncle to the broker who sold you your house holds it as gospel that real estate is one of the best long-term investments, this longest of long-term indices suggests that, on the contrary, it sort of stinks. Between 1628 and 1973 (the period of Eichholtz's original study), real property values on the Herengracht -- adjusted for inflation -- went up a mere 0.2 percent per year, worse than the stingiest bank savings account. As Shiller wrote in his analysis of the Herengracht index, "Real home prices did roughly double, but took nearly 350 years to do so."

The house that Pieter Fransz built is a case in point. In 1855, an estate agent named Robertus van Zoelen bought the house for 6,850 guilders. In 1881, his children sold it to a carpenter, Johann Diederich Brinkmann, for 12,100 guilders -- an increase of 93 percent in real terms. But when Brinkmann sold it in 1888, it was for 10,000 guilders: a net loss. The next sale, in 1899, at 9,600 guilders, was also at a loss. Fifteen years later, with World War I looming, a real-estate agent named Georges Jean Josef Salen bought it for 10,000 guilders: again, a loss in real terms. And when, in 1955, a woman named Grietje Uitentuis bought the house, the 15,000 guilders she paid was, after adjusting for inflation, less than what the house sold for in 1855. Over the course of a century, Pieter Fransz's house actually lost 30 percent of its value.

This sort of thing isn't surprising to Shiller, who says he believes that the notion that real estate is a terrific investment comes in part from the long-term nature of most purchases. You know that your grandmother paid $15,000 for her house in 1951, and it's now worth $250,000. That sounds grand, but most of the increase is simply matching inflation. An analysis Shiller made of home prices in the U.S. going back to 1890 showed an average annual increase of a meager 0.4 percent. By way of contrast, Jeremy J. Siegel of the Wharton School of Business has calculated that over a 200-year period, the stock market had an average annual real rate of return of 6.8 percent. It's only in recent years, Shiller says, that huge increases in real-estate prices have become the norm and that people have come to expect them.
In fond memory of Taipan, a model of modesty, decency, dignity and tolerance. Long may we all prosper from the tremendous legacy of worldly wisdom and specialized real estate knowledge which he left in the "Arguments" thread.
 
tdma800
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Re: How far can it drop? 20% or 30%?

Thu Aug 11, 2016 2:00 pm

yah well Vancouver is closer to tulipmania than it is to tracking inflation.  Make all the justifications you want but at the end of the day, it's a market used to park money at the top end of the market (plain and simple).  Seriously, what industry does this city have other than a network of realtors, mortgage brokers, plumbers, drywallers, electricians?  
don't underestimate tourism and it's effects on real estate prices. Works pretty well for Paris, Manhattan, Rome etc.
Besides the tourism, its well known that buying stones rocks et al is dim, especially considering the taxes you'll pay when you sell them. To top it off, there are still people that haven't understood that things are different here.
 
Geyser
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Re: How far can it drop? 20% or 30%?

Thu Aug 11, 2016 2:03 pm

yah well Vancouver is closer to tulipmania than it is to tracking inflation.  Make all the justifications you want but at the end of the day, it's a market used to park money at the top end of the market (plain and simple).  Seriously, what industry does this city have other than a network of realtors, mortgage brokers, plumbers, drywallers, electricians?  
don't underestimate tourism and it's effects on real estate prices. Works pretty well for Paris, Manhattan, Rome etc.
Oh yeah, tourism is a big driver of home prices  :lol:
Check out Las Vegas, I've heard that they get a few tourists there from time to time.  :lol:
http://www.jparsons.net/housingbubble/las_vegas.html
In fond memory of Taipan, a model of modesty, decency, dignity and tolerance. Long may we all prosper from the tremendous legacy of worldly wisdom and specialized real estate knowledge which he left in the "Arguments" thread.
 
tdma800
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Re: How far can it drop? 20% or 30%?

Thu Aug 11, 2016 2:05 pm

 if property prices just do what they have always done over the long term, that is roughly track inflation, no more and no less. 
I don't believe this is a correct statement in Canada, especially Vancouver.  If that were the case based over the last ten years, assuming a 2% inflation rate, we would be due for about a 60% price drop.  
Also I can't deny Vancouver is in a bubble, but you can't say this is exactly the same as Tulip Mania.  Tulip Mania was based on tulip bulbs, while Vancouver is consistently rated as one of the best cities in the world, it has seen steady population growth, with continual improvements in infrastructure, and a shrinking world with global trade that has elevated Vancouver's status since Expo.  I'm not saying its perfect, but there are many reasons that have helped Vancouver grow at a pace better than inflation and you can't say it is completely based on hype in the same way that pretty flowers were hyped up and escalated in price in the 16th century.   
the comment is dripping with naivety. If real estate prices tracked inflation then Calgary real estate would be worth 2x Vancouver. In fact, worldwide there would a leveling of prices so one city would not be markedly different than another. Clearly this is a brain fart theory based on wishful thinking
Not only that, visitors bring lots of dough,  Other areas with taxes 3 to 4 times higher than those in Vancouver do not matter
 
Geyser
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Re: How far can it drop? 20% or 30%?

Thu Aug 11, 2016 2:23 pm

For all its many flaws, this forum was prob. one of the 1st places to identify that something really unusual was going on in this housing market.

That was 5 or 6 years ago.  Then, with action Van may have had a chance. After years of political and pseudo-intellectual scorn and denial, as Eyes points out, the $ rises may have been too great - the damage to this city, affordability and the millennial generation may be done.

Can I also point out that we have to stop talking in one or other terms, black vs white, local vs foreign terms. Of course local expectations and greed based on the International liquidity factor is part of the picture. Why are people so determined to separate them? They have never been mutually exclusive. The opposite in fact.
Vancouver has experienced massive home price collapses before but it has always eventually returned to track close to long term inflation trends. The biggest collapse was in 1913 when home prices dropped by as much as 90% but many, many decades later the prices returned to their long term close relationship with inflation.

BTW, that 90% drop in home prices was mentioned on CTV news last night. If anyone wants to read a related article they can find it here:

http://thedependent.ca/featured/land-de ... vancouver/

Here's what I consider to be the most interesting bit, it mentions how our local prices were driven by ordinary folks, plus local speculators and foreign (American) investors.
During that land boom at the turn of the century, American speculators bought large tracts of land in the area of Ninth Avenue and Westminster Road,” Anne Broadfoot explains, in her history of the Greater Vancouver Real Estate Board. “To promote sales, they decided to upgrade street names, so in 1909, Westminster Road became Main Street, and ninth [sic] Avenue became Broadway – familiar names found in many major centres around the world, so bound to appeal to the cosmopolite. News reports of the day show that it worked, because all the land sold quickly.”

However, the prewar boom was not to last. Between 1913 and 1915, following the U.S. stock market collapse, and resultant worldwide depression, Vancouver’s real estate bubble burst for the first time; suddenly, commercial rents declined by 50%, and ordinary working people, no longer able to meet their obligations, defaulted on their loans. The city of South Vancouver went into receivership. The market was decimated. In fact, there is one recorded instance of a corner lot on Cambie and Broadway being listed for $90,000, and eventually selling for less than $8,000.
Last edited by Geyser on Thu Aug 11, 2016 2:25 pm, edited 1 time in total.
In fond memory of Taipan, a model of modesty, decency, dignity and tolerance. Long may we all prosper from the tremendous legacy of worldly wisdom and specialized real estate knowledge which he left in the "Arguments" thread.

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