Vancouver: Where's the real state market going?

[FunSugarDaddy]

There's been a number of threads regarding this, and rather than start endless more, why not take a poll?

I personally think the market is going to adjust by about 30%, but many predict that adjustment will be in excess of 40% and some say in excess of 50%. What do most think?

 

[Krustee]

I chose 30-35% only because that is closest the previous estimate I have made in this thread:
https://perb.cc/vbulletin/showthread.php?t=100198

It all depends on how affected we are in our trade with the US.

If you believe what Obama said on Friday as part of his recent visit to Canuck land.

Obama promised to "grow trade and not contract it,"
Read here:
http://sg.news.yahoo.com/afp/20090220/twl-us-canada-trade-obama-7e07afd.html

This should at least quell some of the worry by those industries here who rely heavily on selling to the US (which is about 60% of the businesses out there & 86% of manufacturing industry market.)

So is Obama a soothsayer, is he being forthright when he says;
"We expect the United States to adhere to its international obligations,"?

We shall see & time will tell but in all honesty what is there that we can do if they do not uphold NAFTA?
Not much.

 

[Cosmo]

Hmmm... I wonder which one I will choose?

 

[Lady Companion]

While I'm hoping for a further 50% decline, I think it is likely to drop another 30% from where it currently is. I'm not sure I would be calling it affordable for the most part, but certainly 'more affordable' than it was for the last few years.


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[wess]

While I'm hoping for a further 50% decline, I think it is likely to drop another 30% from where it currently is. I'm not sure I would be calling it affordable for the most part, but certainly 'more affordable' than it was for the last few years.


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I know you want to see some deals, so do I but another 50% and the canadian banks will be in even more trouble.

 

[hapkido]

I know you want to see some deals, so do I but another 50% and the canadian banks will be in even more trouble.

You are absolutely right. I wouldn't be suprised by a major bank failure with a well known financial institution (Insurance or Bank ) in Canada. Everyone laughed and ridiculed me back in 2004 about a possible major bank failure in Wall Street.

With the current global credit squeeze and Canadian major bank stocks being pummeled they need to re-capitalize to raise reserves and I suspect further write offs due to "market to market" accounting on their declining investments which means more recapitalization to increase reserves. They have gone to the markets already raising $$$ and you can only do that so many times before investors lose more confidence ---- death spiral.

The only thing that saved Canadian Banks from perishing was more strict regulations on loan reserve levels. They are not out of the fire yet.

 

[johnniejetpack]

buy now

because the market will eventually return even if it drops a lot now. Right now a regular 1500 sq ft condo in London, England is over a million dollars. We are headed this way my friends. Even if the market drops a total of 40% (which it won't), it will go back up eventually. Inflation is perpetual and that's a fact.

 

[westcoast555]

This ain't London...

because the market will eventually return even if it drops a lot now. Right now a regular 1500 sq ft condo in London, England is over a million dollars. We are headed this way my friends. Even if the market drops a total of 40% (which it won't), it will go back up eventually. Inflation is perpetual and that's a fact.

I do think the market will recover but it will take a while and right now the economy is fucked everywhere and nobody has any money. It's not just a price correction for an overheated local market, the world's financial market has been devastated and there's no credit anywhere and a glut of condos on the market. It's now a buyer's market but I bet there will be some bargains in a year or two. This will take a while to come out of...

 

[wess]

because the market will eventually return even if it drops a lot now. Right now a regular 1500 sq ft condo in London, England is over a million dollars. We are headed this way my friends. Even if the market drops a total of 40% (which it won't), it will go back up eventually. Inflation is perpetual and that's a fact.

Speculative asset inflation is not the same as consumer inflation.

I dont agree with your assumption. This whole problem started because some people thought that real estate was the only safe investment. Now it is obvious that you can get burned hard on real estate too no different then getting burned in the stock market. Real estate has lost its title as a safe investment and people will not forget that for the next 10-15 years.

In some areas, baby boomers will not live to see the prices as high as they were the last couple of years.

 

[hapkido]

Months Of Inventory

Let's all monitor the facts and trends over 2009/2010 folks instead of finger in the air guestimates. This is not rocket science. Supply and Demand Economics will dictate price.

Greater Vancouver Months of Inventory Notice inventory is currently at 3-4x historical average?

http://1.bp.blogspot.com/_rt16FZ_z1...ory_-_http;_housing-analysis_blogspot_com.png

Great Vancouver Sales Notice sales is off by at least 50% from historical average?
http://1.bp.blogspot.com/_rt16FZ_z1...ales_-_http_housing-analysis_blogspot_com.png

Active Listings Notice listings have ballooned by min 50% but in Q3/08 100%?
http://2.bp.blogspot.com/_rt16FZ_z1...ings_-_http_housing-analysis_blogspot_com.png

 

[hapkido]

S&P and Vancouver Condo Market Historical Trend

Does anyone see any correlation between the 2 asset classes (Real Estate and Stock Market) fueled by cheap credit and speculative greed?

S&P historical trend See that incredible rocket up vs historical ?

http://www.nyse.tv/s-and-p-500-index-history-chart.htm

Vancouver Condo Market Trend See the same incredible rocket up vs historical
http://4.bp.blogspot.com/_hYipV07cr...AAhU/IOSsAPwwWlE/s1600-h/u-r-here-q3-2008.JPG


This is clearly an outlier event which means ultimate reversion to the mean.

 

[hapkido]

I'm not going to be trusting the equities market as being safe in the long term.
QUOTE]

I disagree with this. But it's a complex topic to discuss. I know I will be pouring money back into select stocks over 2009/2010. We haven't hit bottom yet but stocks have never been cheaper and the risk/reward over the long term has never been better since early 1970 and 1980.

Warren Buffett "Be greedy when others are fearful"

 

[FunSugarDaddy]

Thanks

for the input guys and ladies. It's certainly an interesting topic. For reference, it's estimated the US stock market has lost 10 Tillion dollars and the US real estate market 6 Trillion, since mid 2006 when the correction first started appearing.

I would imagine it's affected each of us somewhat differently.

I have rental properties that have dropped in value. I imagine some have homes which have dropped and some still are wondering when to jump into their first house purchase.

It's the last group that will eventually provide some stability to this market.

 

[mclovin76]

right now i think its about 17 percent down, i c it stabilizing there till the olympics are over and inflation really starts to show its ugly face around. With the price of food and goods going up there isnt much that could go down to meet the needs of people. Unless we all get a 15 percent wage raise after the olympics i c the real state market dropping for about 4 years to about 35 to 40 percent drop on prices. Mortgage rates will shoot up to 8 percent, as the banks make money no matter what. But, canada is in good shape unless we decide to keep bailing out the US ( wich we have no choice ) trading treasury bonds for oil really isnt working out for our dollar right now lol.

 

[hapkido]

I disagree with your assessment about not knowing a bad vs good company. By the very nature of your comments I know you shouldn't be investing in Stocks. If you were a savvy investor and understood their business model and cost structure (Financials, BS, Cashflow, competitive advantage,) you would know all those companies (nortel, air canada, GM etc)were going down the toilet. It's all about research and sticking to industries you understand. If you can't do this on your own then stay away from stocks. I do my own research and trust nobody. Before I invest in a particular stock I spend 3 months of effort researching and analysis (history, Listening to Quarterly calls, 10K, Competitors, Historical and projected Financials, Management Integrity and honesty, Business Model, Speaking to friends/Contacts in the industry, Industry Drivers and Forces, Strategic competitive advantage, Business Risks, Intrinsic Valuation etc) How much do you? If you don't put this type of effort of research then you are just gambling and throwing your money away. Generally avg joe spends more time researching a purchase for the latest greatest electronics/car than their own investments.

"I think it's too much of an gamble right now. Who would have thought that GM would tank? This is a company that traded at 25.64 an year ago, it traded at 1.80 today and can be compared with Nortel, 360 Networks or Air Canada all of which rewarded their equity share holders with 0 value as they went bankrupt.

It's impossible to know which companies have run out of operating credit until they have, it's impossible to know which companies have been over leveraged until they file for bankruptcy.

In the case of Nortel and 360 Networks, the financial industry kept trying to get people to buy the shares right until the regulators closed the market in their shares.

Right now, it's impossible to know how many suppliers to GM and Chrysler will die despite contracts with other manufacturers and the auto parts industry. In fact, some of the suppliers to GM and Chrysler aren't immediately apparent to the person who isn't an industry insider.

Then, there is the effect of the US Depression on the Oil Sands in Alberta, the Lumber Industry in BC, the Steel Industry in Ontario and even the electric energy suppliers in Newfoundland, Quebec, Ontario and BC.

How much electricity are we transmitting to the US right now that will never be paid for? Are we going to see States like California declare that they don't have to pay the bill the way they did in the 1990s?

It would be a full time job keeping track of all this stuff and I already have a full time job."

 

[wess]

We haven't even begun to see the pain. Housing values, in the end, are dependent on the ability of the middle class to afford housing.

In the last few years, people have been buying incredibility luxurious homes. That will change. We are going to see a pull back to more basic housing for the average wage earner.

That is going to leave a surplus on the market of over built "consumer palaces".

The adjustment of consumer expectations is the whole reason that the auto industry has tanked. No middle class wage earner expects that they will have the money to replace their vehicle every three years, no one expects that they can afford a vehicle for every member of the household who holds a driver's license.

The same thing is going to happen with homes. People are going to adjust to not wanting a dedicated bathroom for each member of the household, people are going to adjust to smaller yards and smaller houses.

I think we are going to see a number of people pulling back into Vancouver, Burnaby, New Westminster and Coquitlam where there is a reasonable amount of public transit and deserting the areas further out.

That's why I don't think the market in the Vancouver, Burnaby, New Westminster and Coquitlam areas is going to tank completely. I think that Surrey, Delta, Langley and Abbotsford are where the home values are really going to tank.

I don't know what to think about Richmond. I would never buy a house on a flood plain and rely on government to keep my home safe by maintaining the dikes, dredging the river, etc. However, Richmond seems to be a colony that is strongly Chinese and this may insulate it from tanking.

Once the housing prices in Vancouver and Burnaby have come near 1996 values, I intend to take the money that I took out of the equities market and buy myself rental houses to guarantee my retirement income.

I'm not going to be trusting the equities market as being safe in the long term.

I would like to thank the people that were discussing the coming recession a year and half ago. They made me think, do some investigation and escape the loss of any chance of retiring.

I guess if you pay cash for the properties then you will be ok. Real estate is no different then the stock market, nothing is safe.

If you buy property wouldnt you be worried about double digit interest rates in 3-4 years ?

 

[FunSugarDaddy]

I disagree with your assessment about not knowing a bad vs good company. By the very nature of your comments I know you shouldn't be investing in Stocks. If you were a savvy investor and understood their business model and cost structure (Financials, BS, Cashflow, competitive advantage,) you would know all those companies (nortel, air canada, GM etc)were going down the toilet. It's all about research and sticking to industries you understand. If you can't do this on your own then stay away from stocks. I do my own research and trust nobody. Before I invest in a particular stock I spend 3 months of effort researching and analysis (history, Listening to Quarterly calls, 10K, Competitors, Historical and projected Financials, Management Integrity and honesty, Business Model, Speaking to friends/Contacts in the industry, Industry Drivers and Forces, Strategic competitive advantage, Business Risks, Intrinsic Valuation etc) How much do you? If you don't put this type of effort of research then you are just gambling and throwing your money away. Generally avg joe spends more time researching a purchase for the latest greatest electronics/car than their own investments.

"I think it's too much of an gamble right now. Who would have thought that GM would tank? This is a company that traded at 25.64 an year ago, it traded at 1.80 today and can be compared with Nortel, 360 Networks or Air Canada all of which rewarded their equity share holders with 0 value as they went bankrupt.

It's impossible to know which companies have run out of operating credit until they have, it's impossible to know which companies have been over leveraged until they file for bankruptcy.

In the case of Nortel and 360 Networks, the financial industry kept trying to get people to buy the shares right until the regulators closed the market in their shares.

Right now, it's impossible to know how many suppliers to GM and Chrysler will die despite contracts with other manufacturers and the auto parts industry. In fact, some of the suppliers to GM and Chrysler aren't immediately apparent to the person who isn't an industry insider.

Then, there is the effect of the US Depression on the Oil Sands in Alberta, the Lumber Industry in BC, the Steel Industry in Ontario and even the electric energy suppliers in Newfoundland, Quebec, Ontario and BC.

How much electricity are we transmitting to the US right now that will never be paid for? Are we going to see States like California declare that they don't have to pay the bill the way they did in the 1990s?

It would be a full time job keeping track of all this stuff and I already have a full time job."

I personally think investing in exchange traded funds is the way to go. If you think you have the resourses or the intelligence to outsmart virtually thousands of CFA's trying to do the same thing you are, but with unlimited resources, then you're delussional. By definition, if you buy an individual stock you are effectively saying you know more than the market does. Good luck with that.

One reason why I know this doesn't work overly well is because I've prepared in excess of 3,000 tax returns over the years and the majority of investors who use brokers have capital loss carry forwards on their statements. Meaning for that by and large, their losses have exceeded their gains over the years and neither do they don't have a lot of unrealized gains they're sitting on.

But I will grant you this. I would take this option over buying 80% of the equity mutual funds out there. Some fund companies like Mawer and possibly PH&N would be the exceptions.

 

[wess]

I disagree with your assessment about not knowing a bad vs good company. By the very nature of your comments I know you shouldn't be investing in Stocks. If you were a savvy investor and understood their business model and cost structure (Financials, BS, Cashflow, competitive advantage,) you would know all those companies (nortel, air canada, GM etc)were going down the toilet. It's all about research and sticking to industries you understand. If you can't do this on your own then stay away from stocks. I do my own research and trust nobody. Before I invest in a particular stock I spend 3 months of effort researching and analysis (history, Listening to Quarterly calls, 10K, Competitors, Historical and projected Financials, Management Integrity and honesty, Business Model, Speaking to friends/Contacts in the industry, Industry Drivers and Forces, Strategic competitive advantage, Business Risks, Intrinsic Valuation etc) How much do you? If you don't put this type of effort of research then you are just gambling and throwing your

Agree. Lots of strong companies around. JNJ, Coke, Philip Morris
, Kraft, to name a few. I would feel safer in any of these then in real estate.

 

[wess]

I personally think investing in exchange traded funds is the way to go. If you think you have the resourses or the intelligence to outsmart virtually thousands of CFA's trying to do the same thing you are, then you're delussional. By definition, if you buy an individual stock you are effectively saying you know more than the market does. Good luck with that.

One reason why I know this doesn't work overly well is because I've prepared in excess of 3,000 tax returns over the years and the majority of investors who use brokers have capital loss carry forwards on their statements. Meaning for that by and large, their losses have exceeded their gains over the years and neither do they don't have a lot of unrealized gains they're sitting on.

But I will grant you this. I would take this option over buying 80% of the equity mutual funds out there. Some fund companies like Mawer and possibly PH&N would be the exceptions.

Not if you buy only for the dividends. I only buy individual stocks. A % is a %. I dont give a damn about the principal.

 

[FunSugarDaddy]

Not if you buy only for the dividends. I only buy individual stocks. A % is a %. I dont give a damn about the principal.

Ya well most of the bank stocks pay dividends and look how that's turned out over the last year or two. The dividend index is down about 30%, so there really wasn't anywhere to hide last year if you were in the market. The only savior was if a sizable portion of your portfolio was in fixed income, then you were somewhat protected.

As for not giving a damn about the principal, most of us do. It the same thing as buying a house with a huge downpayment. Perhaps you have positive cash flow, but if the price of the house is dropping beyond what you paid for it, you may not have a profitable investment.