Now that the market has collapsed…

“There is no indication, at this point, of any kind of substantial decline in prices.” –Cameron Muir, BC Real Estate Association, July 4 2008

“The bull market in housing is over in British Columbia, and it’s been over for several months.” –Cameron Muir, BC Real Estate Association, October 30 2008

It’s fascinating to watch the ebb and flow of hype. Less than 90 days ago the pundits were openly denying the mounting evidence of the real estate bust. Now, it’s an openly acknowledged fact — one, we’re told, that’s been the case for “several months.”

The about-face gives the media a new license on how they can report real estate news. It’s no longer off-limits to go negative. But I caution anyone thinking the frame has changed. It hasn’t. Real estate reporting remains framed as a lifestyle and consumer issue. Fundamental questions, such as what are the real fundamentals to support housing prices, are largely ignored. Even Global News, which recently exposed the RE industry on its hype, concludes its analysis from a consumer frame. Here’s how reporter Ted Chernecki closes his October 23 report:

So if you’re on the inside looking out and planning on the equity in your home to finance your retirement, bad news. But for those on the outside looking in, for any first-time buyers — this is probably the best news you’ve heard in decades.

The statement is accurate but it’s also narrow. It leaves no room for the tens of thousands of Lower Mainland families who, even with current price declines, face no prospect whatsoever of being able to afford appropriate accommodation. Where is the coverage that looks into what housing should be worth? Where is the reporting that addresses the relevance of affordable housing to the future of the region’s economy?

21 Responses to “Now that the market has collapsed…”

  1. aetakeo Says:

    Yeah, I haven’t been *terribly* fond of all the ‘this is a great market for a FTB’ that I’ve been hearing. No, no it isn’t. Not yet. Maybe in the outlying areas – but in Vancouver, the bottom rung is still up there a long way. I assume it will always be pricey, but 8% drop is no where near a correction.

  2. buff_butler Says:

    i love how the “experts” are like “well we’ve known for months… where have you been?”

    The unfortunate fact is that if you dont follow the industry on a regular basis these people come off as very smart.

  3. anon Says:

    An 8% drop has only got another 42% to go…

  4. jesse Says:

    “Where is the coverage that looks into what housing should be worth? Where is the reporting that addresses the relevance of affordable housing to the future of the region’s economy?”

    It is probably a losing battle to hope for MSM to accurately report on true real estate fundamentals; that is, how prices, rents, and incomes are invariably linked. The question, perhaps, is how will YOU, your friends, and your family profit from knowing better.

  5. blueskies Says:

    It’s fascinating to watch the ebb and flow of hype.

    ummm
    BS doesn’t flow
    it just sits there
    lumpy and smelly….

  6. The Pope Says:

    While I agree that MSM coverage of the local market is thin and light on analysis, I remember that Ted Chernecki quote in a slightly different context. The story was about the CUCBC forecast of house prices falling by 30% over the next two years. I remember being impressed that they didn’t wrap up the story as a current ‘buying opportunity’ now that house prices have fallen, as many marketers like to try to spin it.

  7. Carioca Canuck Says:

    I´d bet that their are a lot of lower mainland homeowner´s that could think of something else to hang from that realtor´s signpost…….

  8. Larry Yatkowsky Says:

    this may provide reasoned perspective:

    http://tinyurl.com/5j9shf

  9. Noz Says:

    Remember…you have a slew of Realtors out there that’ll say anything for a sale..that plays a part in the overall hype too.

    Plus dumb people…that’s a key ingredient.

  10. tripit Says:

    reckon the average price for a home in vancouver should be about 415,000 same as in toronto with its 13% drop this year. Why should B.C more expensive than Toronto , the financial capital where the stock market and all those high paid jobs are. How many people in vancouver earn more than 150K a year , so how can the average house price be near 700K nearly double of Toronto.
    I think it will take a while before we start seeing the real correction here in B.C I mean to a average house price of 500K

  11. George Says:

    been trying to sell my house valued at 845,000 last year for 675,000 not a single offer. Mind u i bought for 373,000 in 2001 and having lived in it for 7 years ..

  12. anon Says:

    tripit, just wondering where you get 700k from?

    A quick’n’dirty google search gave me $557,000 (as of August 2008) and prices have come down since, at least according to this blog.

    I understand your point, however. Toronto being the center of the universe and all, should be alot more expensive, but the same stats show an average house in TO at $364,000. Perhaps there are just more available houses? Supply/demand, and all that.

  13. ABFAB Says:

    Love the stats. please show me a liveable house for $557,000 in Vancouver.

  14. Larry Yatkowsky Says:

    ABFAB
    here yah go 549,000 V742408 4936 Inverness. Tell Norm I sent you.

  15. patriotz Says:

    tripit, just wondering where you get 700k from?

    A quick’n’dirty google search gave me $557,000 (as of August 2008) and prices have come down since, at least according to this blog.

    Where did you get that nonsense from, the GV SFH benchmark is now $695,962. Click on the link to Vancouver Condo Info and you’ll see the graph right on your screen.

  16. ABFAB Says:

    Fantastic! Seems reasonable for a TWO bedroom. I’ll be there with my chequebook handy!

  17. anon Says:

    From http://www.rebgv.org

    The Real Estate Board of Greater Vancouver (REBGV) reports that residential benchmark prices, as calculated by the MLSLink Housing Price Index®, declined 8.8 per cent between May and October 2008, resulting in a 3.9 per cent year-to-date price reduction for detached, attached and apartment properties in Greater Vancouver between Octobers 2007 and 2008. In May 2008, the overall residential benchmark price was $568,411, compared to $518,668 in October 2008.

  18. patriotz Says:

    Tripit said “house”, 568K is the overall figure for all residences including condos.

  19. VancouverGuy Says:

    The reason why they are not focusing on fundamental value is that there are no “experts” who are focused on fundamental value (aside from Tsur, and he is wrong). Without experts to provide them the basis for a report, all they can do is talk about forecasts from one guy or another.

  20. VancouverGuy Says:

    By the way Condohype, I talked to the girl who said she approved the Oh James! ad. She said she had read your post on it! Very funny.

  21. patriotz Says:

    there are no “experts” who are focused on fundamental value (aside from Tsur, and he is wrong)

    Tsur does not focus on fundamental value, he has his own metric of value which includes expected appreciation. Which is why he’s wrong.

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