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RiskArb
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Calling a market top

Wed Aug 29, 2012 7:23 am

So one of my deadbeat buddies from high school (never held down a job or followed through on any type of ambition) just bought a place in Surrey. With 5% down. He actually bought it in April and I only found out last week when I passed through town.

So that means we're at a market top. It was official the day he closed.

[exception: still some china froth to work it's way into a few areas..... but I don't think it's a systemic factor hereon]

Happy trails!

PS - I don't log-in to this place much, nor do I visit Vancouver so someone please e-mail after the NDP win and prices have corrected a nice 15-20%.

:wink:
 
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Warren12
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Re: Calling a market top

Wed Aug 29, 2012 8:42 am


So that means we're at a market top. It was official the day he closed.
I'd say it was closer to his April purchase date. Time will tell. :mrgreen:
 
jimtan
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Re: Calling a market top

Wed Aug 29, 2012 3:49 pm

What about the top in Toronto? :mrgreen:
 
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jesse1
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Re: Calling a market top

Wed Aug 29, 2012 4:06 pm

Vancouver will likely be YOY negative (Teranet HPI measure) in September. Unless sales start improving significantly it's likely more than a 5% YOY drop by year's end.
There is no shame in overpaying
 
Geyser
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Re: Calling a market top

Wed Aug 29, 2012 4:19 pm

It's hard to argue when RiskArb presents such a powerful bearish indicator. I'll check and see if some of my inbred acquaintances have just bought too, I'm guessing they have. :D
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.
 
HAM
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Re: Calling a market top

Wed Aug 29, 2012 7:18 pm

The top for Van, Rich, and w Van was May 2011. After May 2011, sales have tanked and slowed in many markets. This last spring these delusional buyers thought that the spring will bring higher prices. Anyone that bought in the last 5 months, have lost equity already.
So jimmy said I missed the dip in Richmond last year. And now prices have fallen even more with no balance in sight! The poor old man is just too old and grumpy!
 
Taipan
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Re: Calling a market top

Thu Aug 30, 2012 2:11 am

..
Last edited by Taipan on Mon Aug 12, 2013 2:15 am, edited 1 time in total.
 
gordholio
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Re: Calling a market top

Thu Aug 30, 2012 6:40 am

A 50% drop means crapholes in East Van (most definitely NOT the Best Place on Earth) would *still* be a half million dollars. The crappiest crapholes in the middle of Langley (where the crap factor is pretty high and the streets are paved with crap) would be $250,000. A non-craphole with a view in White Rock would be $750,000. And one could actually buy a dump west of Granville for that same $750,000.

Looking at it this way, an average 50% drop in the Gloomiest Place on Earth seems completely reasonable. Hell, it's not enough.
 
eyesthebye
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Re: Calling a market top

Thu Aug 30, 2012 7:08 am

market top in Vancouver was April/May 2011
the cure for higher prices is moving to a destination with lower prices
 
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Warren12
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Re: Calling a market top

Thu Aug 30, 2012 8:24 am

A 50% drop means crapholes in East Van (most definitely NOT the Best Place on Earth) would *still* be a half million dollars. The crappiest crapholes in the middle of Langley (where the crap factor is pretty high and the streets are paved with crap) would be $250,000. A non-craphole with a view in White Rock would be $750,000. And one could actually buy a dump west of Granville for that same $750,000.

Looking at it this way, an average 50% drop in the Gloomiest Place on Earth seems completely reasonable. Hell, it's not enough.
I disagree with your assessment. Plenty of places in East Van sell for under $1M, ditto Langley for under $500k.

Prime condos downtown would be down around $300-$350/sf though. I'm not sure things will dip that low to be honest. Of course different areas will see different drops.

I would expect Van West to drop the most in terms of % and also $. A 50% cut showing $1M off some properties will make big headlines, meanwhile other areas may drop 30%. Just my guess.
 
gse36
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Re: Calling a market top

Thu Aug 30, 2012 8:32 am

remember its moot to say 50% across the board. some properties will drop more so than others (typically those which have gone up more than others).
.... that is if the past RE cycle patterns are to repeat.

I mean it makes sense. if things get too cheap, investors will just buy purely on cashflow. i.e. $1M house to $500k still doesn't make sense cashflow-wise. but $300k condo to $150k will. hence you are more likely to see 50% decline in overvalued houses than a 50% decline on a standard condo.
 
vanpro
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Re: Calling a market top

Thu Aug 30, 2012 9:34 am

remember its moot to say 50% across the board. some properties will drop more so than others (typically those which have gone up more than others).
.... that is if the past RE cycle patterns are to repeat.

I mean it makes sense. if things get too cheap, investors will just buy purely on cashflow. i.e. $1M house to $500k still doesn't make sense cashflow-wise. but $300k condo to $150k will. hence you are more likely to see 50% decline in overvalued houses than a 50% decline on a standard condo.
Not if they expect continued price declines (i.e. capital/equity losses). that is what causes over-shooting to the downside (exact mirror opposite to the overshooting to the upside) - see for example US, etc....where even w/ very positive cash flow and high cap rates, prices continued to decline as buyers/investors stayed on sidelines - only very recently after overshooting on the downside have investors come back to buy the rental properties...
 
eyesthebye
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Re: Calling a market top

Thu Aug 30, 2012 9:47 am

A 50% drop means crapholes in East Van (most definitely NOT the Best Place on Earth) would *still* be a half million dollars. The crappiest crapholes in the middle of Langley (where the crap factor is pretty high and the streets are paved with crap) would be $250,000. A non-craphole with a view in White Rock would be $750,000. And one could actually buy a dump west of Granville for that same $750,000.

Looking at it this way, an average 50% drop in the Gloomiest Place on Earth seems completely reasonable. Hell, it's not enough.
I disagree with your assessment. Plenty of places in East Van sell for under $1M, ditto Langley for under $500k.

Prime condos downtown would be down around $300-$350/sf though. I'm not sure things will dip that low to be honest. Of course different areas will see different drops.

I would expect Van West to drop the most in terms of % and also $. A 50% cut showing $1M off some properties will make big headlines, meanwhile other areas may drop 30%. Just my guess.
+1
craphole is east Vancouver is <700K - which there are 49 listings for.
do I see these listings falling to 300 or 350K? Not likely.

i.e.
http://www.realtylink.org/prop_search/D ... 00&SCTP=RS

http://www.realtylink.org/prop_search/D ... 00&SCTP=RS

http://www.realtylink.org/prop_search/D ... 00&SCTP=RS

or there are actually some decent options under 700K.
i.e.
@ 599K
http://www.realtylink.org/prop_search/D ... 00&SCTP=RS

@669K
http://www.realtylink.org/prop_search/D ... 00&SCTP=RS

@675K
http://www.realtylink.org/prop_search/D ... 00&SCTP=RS

@679K
http://www.realtylink.org/prop_search/D ... 00&SCTP=RS
the cure for higher prices is moving to a destination with lower prices
 
Fabien
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Re: Calling a market top

Thu Aug 30, 2012 10:15 am

From June 2011 referring to April-May 2011.
Im not bullish at all about the SFH market in the short term after such changes. I said a few months ago those buying SFH at this time (not 2008) had better be very rich, or very brave.

I for one would not like to be sitting on a newly purchased SFH in Richmond or say an expensive condo on a 94 year lease at UBC. These are two of about a dozen markets in peril.
The other 10 are set to follow :shock:

Certainly as the original poster wrote, knowing someone with unbeleivably bad timing is also a good indicator. In my case its usually me! :P
 
Geyser
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Re: Calling a market top

Thu Aug 30, 2012 11:21 am

by gse36 » Thu Aug 30, 2012 8:32 am

remember its moot to say 50% across the board. some properties will drop more so than others (typically those which have gone up more than others).
.... that is if the past RE cycle patterns are to repeat.

I mean it makes sense. if things get too cheap, investors will just buy purely on cashflow. i.e. $1M house to $500k still doesn't make sense cashflow-wise. but $300k condo to $150k will. hence you are more likely to see 50% decline in overvalued houses than a 50% decline on a standard condo.
gse's observations seem to make sense, particularly when you look at the price movements of SFH versus Townhouses & Codos. The disconnect is glaringly obvious and if you subscribe to the notion that "whatever goes up the most will probably come down the most", the latest charts at http://www.Chic.biz look more than a bit scary for the SFH market.

I do think that TH & Condos are also currently overpriced but the disconnect in SFH pricing looks far more severe, hence the recent smaller drops in TH & Condo pricing seem appropriate. Of course the big wild card with the TH & Cond market is the potentially huge supply in the pipeline. I recently read that 16 towers are nearing completion and over 60 others are in the planning stages. Presumably a lot of those will be put on hold but if even 25% of them go ahead things could get interesting if demand remains low.
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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