Don’t count on a market rebound

Photo credit Steph Lim

Monday’s Olympic Village city council meeting felt like a case of over-promise and under-deliver.  I’m probably let down by my own hype.  I hoped for new revelations.  Maybe some fisticuffs.  There was none of it.  A handful of councillors gave debate despite being in agreement on the motion.

The best line of the afternoon came from David Cadman.  He was going on about the completion guarantee when he said something about “the marble and German fridges” having been ordered.  It hit me in the gut.  All sorts of shiny lifestyle crap — literally thousands of appliances, countertops, faucets, chrome-this and stainless steel-that — all of it shipping, taxpayer-paid, to the fiasco at False Creek.

I’m increasingly worried about the expectation of a “bounce back” in the Vancouver real estate market.  As VHB writes at Housing Analysis, many people who are supposedly well informed aren’t getting the memo about the real estate decline.  At council, we had Mayor Gregor Robertson touch on the possibility of a market “rebound” in 2010.  Suzanne Anton told reporters the Olympic Village could turn a profit.

There’s little challenge from the press on these assumptions.  In fact, Global’s Keith Baldry in his news report said “when the market goes up” as if it’s a given.  In another story, reporter Ron Bencze said “timing may be on the city’s side” because the economy is “expected” to go up.  (I turned off the TV when Helmut Pastrick showed up.)

I remind our city officials to be cautious.  No Olympic Village plan should rely on achieving high selling prices.  It must be understood that the prices at the peak of the market do not reflect the baseline of the market’s “true” value — they are the indicators of speculative excess.  In a declining market, the predictable direction of housing prices is toward historical norms in line with rents and local incomes.

Photo credit: Steph Lim

59 Responses to “Don’t count on a market rebound”

  1. dingus Says:

    And in what universe does any market recover in a matter of months? Do they look at their RRSP statements, and think “oh, well, that nasty credit crunch and recession will be behind us by summer”? Does any rational person think that the arrival and subsequent departure of the Olympics will spur the housing market?

    The past few years I’ve felt like I’ve been living in the Invasion of the Body Snatchers, where property obsessed zombies have taken over. First it was normal people quitting their jobs to flip houses. Then they took over the local media. Now they run city council! Will it never end!

  2. The Urban Dweller Says:

    They are foolish if they think the market will rebound that quickly. It may stabilize in terms of the 1-2% increase YOY, but to get back to peak levels will take years if not a decade.

    I’m fed up with our politicians and media. They think the citizens of Vancouver are idiots. Well maybe 25% of them are and the others may not fully comprehend the complexities of the real estate and financial markets let alone the simple concepts illustrated in micro and macro economics. That 25% contains both politicians and the mainstream media.

    And the Canucks are down 3-0. I must now go back and bag my head against the wall! Can’t anything go right in this god forsaken town!!!

  3. patriotz Says:

    Prople are still missing the cause and effect, whether willfully or no I don’t know. The RE bust is not due to the credit crunch and recession. The cause of the credit crunch and recession is that RE was overpriced.

    RE will not go back up when “things get back to normal”. Things will get back to normal when we have normal RE prices.

  4. VanCityGuy Says:


    I hear you loud and clear.

    Real estate was overpriced, disgustingly so, and the price fall is not due to the credit crunch and recession but is a classic bubble collapse.

    The slide in prices is going to continue as well, and I suspect the slide will be larger than many are anticipating because the supply-side is still overweight, and still being added to, though at a drastically declining level.

    Stubborn as they may seem, the fact that there are still many who believe that prices will eventually recover to 2007 levels is a testament to the strength of bubble-thinking, or group-think, or whatever you want to call it. There’s a sociology/marketing experiment here somewhere.

    What still worries me is the amount of 40 year mortgages sold in Canada in the first half of 2008, and whether they haven’t been taken account of yet in this real-estate market. A negative equity situation would be very ugly and reminiscent of Calgary, and thoughts patriotz?

  5. doug r Says:

    Prices have been dropping in LA county since 2006, San Diego county since 2005. We got years to go. Prices should get back to 1995 levels, adjusted for inflation.

  6. Strataman Says:

    Condohype; You know Philip Owen? Well I talk to him regularly and as a person he is one helluva great guy…but he has no doubt “we” Vancouver are different and is quite convinced that not only will the city not lose but will make a profit. I have mentioned the US and similar prognosis and his answer is we are different. Nothing substantive just an almost religious belief (a faith if you will). It sorta stuns me almost to the point where I have to wonder…are our politicians actually REALLY brainwashed. HEY I”M serious! I believe that in many cases they will NEVER agree with what they don’t want to hear no matter what happens.

  7. jesse Says:

    It is disturbing the faith in Vancouver real estate’s triumphant return is so ingrained in the city elite’s psyche. Why is it so hard to understand basic finance? Prices relative to incomes are unsustainable. It is SO simple it boggles the mind.

    Sometimes I think it’s a bad dream, you know the one where you’re drowning, where no matter how loud you scream for help, nobody seems to hear? How hard do bloggers have to scream for these people to listen? When am I going to wake up?

  8. patriotz Says:

    Prices should get back to 1995 levels, adjusted for inflation.

    Prices will fall at least that far. That was a market top almost as high in real terms as the 1981 peak.

    Take a look (pdf)

    Also note that wages have been lagging inflation since 1982.

  9. The Urban Dweller Says:

    I agree with all your points but some of you are getting a little too textbook on me. Yes the basic principles apply, they always will but there is more to life than what is in a text book. You have to take externalities and add them to the mix.

    1995 levels really? I don’t see it happening but if it does, I’ll scooping up properties left and right.

    The real estate decline has been precipitated by fear. This has led to the bubble bursting (it was going to eventually but this has made it happen sooner). Now we are seeing declines which have been sped up due to the global credit crisis. Supply far exceeds demand and there is more on the way (some of which is accounted for via presales, for what its worth).

    However, as less projects come on board and more people continue to move to the lower mainland you’ll see a stabilization, sooner than you might think. I don’t see continual double digit declines after 2010. All I know is I hear people waiting for another 10% price reduction to get back in the market. Are they stupid to do so? Possibly, but they have the ability to do so and were willing to enter the market even before the “crash”.

    Not slagging on anybodies viewpoints as I believe this situation has us all guessing.

  10. VHB Says:

    UD: You predict that people will be clammering to get back in after another 10% leg down.

    a) Are you sure they will be able to get financing? Banks tend to close their umbrella stands at the first sign of rain.
    b) People may say what you’re hearing now, but when the downward momentum is -20% pa, it takes a brave man to attempt to catch the falling knife. Won’t it be tempting for your friends just to wait ‘another 6 months’ until prices stop falling? This perpetuates the decline

    You say that fear caused the bubble to burst. This is not correct. It burst because it was there. It HAD to burst at some point–which you do acknowledge. I don’t care if it was fear, unemployment, the phase of the moon, or Bob Rennie’s choice of tie. It doesn’t matter what the proximate cause was–any of 100 arrows could have burst the bubble. Prices are falling because they were too high. Simplicity.

    Fewer projects coming online? True–not many are going to be started in 2009-2014. But there is one hell of a backlog of units now under construction. Not to mention the resale inventory. It will take well beyond 2010 to clear this backlog.

    You might be right that by the end of 2010 the double digit declines will be over. That might be the case. But that doesn’t mean a return a) to double digit increases or b) to 2007 prices anytime soon.

    There is a very good chance of at least 50% decline in condo prices coming. The sooner we all adjust to that, the easier this will be.

  11. doug r Says:

    Here’s a good chart on San Diego county, down roughly 50% from 2005.
    Here’s the Case-Shiller index (resale value). Just click on one of the ten cities and note how the wave of plummeting house prices works its wave north and west:

  12. foo Says:

    I think the reason the elite are still so high on the RE drugs, is that most of their careers coincide with secular fall in interest rates that started in ~1982. When interest rates fall semi-continuously for 25 years, a highly leveraged investment like RE will go up, seemingly forever. That, of course, fuels speculation, which just makes it go up even more.

    However, we have now reached the point where interest rates will not fall ever again (ok, I guess we have another 1-2% to Japanese heaven). Hence, there is a cap on the appreciation, no matter how special, different, and Olympic-endowed your RE is.

    Unfortunately, for people who have only ever seen housing prices go up in their adult lifetimes (punctuated by a few short, sharp dips), it’s impossible to comprehend that things might actually have changed.

  13. vancityguy Says:

    The various bullish/bearish arguments over Vancouver real-estate, I think, all have to be taken with a grain of salt.

    Like any city with a drastically overheated (and yes, in my opinion, disgustingly overpriced) real estate market, the respective views from both camps, for the most part, will be partisan. The bulls usually have a substantial interest in the market, and will voice their ‘fundamental’ in that respect based more on sentiment than fundamentals. Likewise, the bears usually don’t have an interest in the market, and more often than not would like to enter it but are unable at present prices, thus they will voice their own ‘fundamental’ reasons for why they’re cheering as valuations go down.

    It was a bubble. Period. And Vancouver, I feel, will fall further, and take longer to recover than most other North American cities, and the recovery will likely take more than a decade, if not quite longer. But it is not Armageddon.

    UrbanDweller put it right – “I believe this situation has us all guessing.”

    When oil was 147, no one, and I mean NO ONE, saw it under 40 at this point. Vancouver real-estate will take a long time to recover to base prices which will still be lower than those established in 2007, especially given the fact that real estate will continue to weaken for the rest of the year in my view. But for every super-bear, you’d better believe that they’ll be venturing into this market at some point in the next 2-3 years like a dirty shirt.

    We’re all pundits, and 2008 taught that punditry in face of sentiment is useless.

    – 2 cents

  14. Mrs Loquacious Says:

    In the adult world of RE and investments, I’m a total newbie, but even *I* know that prices have a ways to fall before a return to the “norm.”

    Yesterday, while speaking with an investment guy at the bank, I was told that we should consider buying NOW in the RE market, before it goes up again in the spring. And this, from a purported “expert” in investments and investment banking. I told him I’d be back in 2 years to tell him how wrong he is.

    I swear the banks are in bed with all the other speculunatics out there!

  15. patriotz Says:

    1995 levels really? I don’t see it happening but if it does, I’ll scooping up properties left and right.

    He said adjusted for inflation. That’s the same real (inflation-adjusted) price as in 2005. Were you “scooping up properties left and right” in 2005? Were properties anywhere near cash flow in 2005?

    Take a look at that graph again. Do real 1995 prices look like a market bottom to you?

  16. Urban Dweller Says:


    I thought he was talking about the blue line not the red. My bad, I apologize. To answer your question, I bought in 2003 and 2004 a little in 2005 heavily mainly in the burbs of Richmond and Delta. Most of the money was borrowed from banks and family. At the time I was a mere pizza boy delivering pizza and attending business school at the same time. It was a high risk situation, but I was rewarded for it. Unlike others I knew we’d come tumbling down I just thought it wouldn’t be this fast of a decline.

    I sold a bunch of stuff in 2007. Same thing with stocks. I became a bear in 2007 for stocks by shorting the market. You can’t do that with real estate.


    Good points, and thanks for acknowledging some of my points.

    Awesome discussion going on here btw.

  17. doug r Says:

    I remember 1982, that’s how I knew RE DOESN”T always go up.
    That graph of yours seems a couple of years off, I thought the bottom was around 1996 when I was looking at a new 2br+ in PoCo for $139k. Saw a place from about the same time in Richmond the other day 1br about 570 square feet about $250k.
    We got a long way to go yet, I’m thinking bottom around $200 a square foot.

  18. greg Says:

    For what it’s worth I think we will see buying all the way down, just like we saw buying all the way up. The thing is, the dynamics have changed, and where every purchase is cheaper than the previous one, I fail to see how that will establish any floor for prices. I remember 1982 as well, and I think what we will see is a big drop faster than expected, then a floor developing and single digit declines or inclines after that.

    Course, it could be worse. Me personally, I am a mega bear, but as I am in cash at the moment, I also worry about what might happen to my cash if financial institutions come under extreme pressure, which is likely to happen around the time of the ultimate bottom – so I will probably buy before that. In fact I will probably buy this year. It all depends on what the spring listings throw up, and whether my offers at 10% below current lists get any replies. I’m guessing by March, I’ll find a place I like and pay too much, compared to 2010-2011. But because of my concerns about cash, I’m willing to take that chance.

    If I was more leveraged, I would definitely wait longer.

  19. patriotz Says:

    The various bullish/bearish arguments over Vancouver real-estate, I think, all have to be taken with a grain of salt.

    This is what Krugman calls the “opinion differs on shape of Earth” viewpoint, that both sides of an argument deserve equal skepticism.

    Well they don’t. Both camps have made testable predictions which determine if their arguments have merit.

    The bulls have already been proven wrong because the market is falling. The bears will be proven right if and when the drops they predicted come to pass, and we are more than half way to the bear consensus (if I may call it that) of at least a 30% nominal drop already.

    You are also mistaken in attributing bias to the bulls and bears from the former holding RE and the latter not. That’s not bias, that’s just putting your money where your mouth is, in other words their actions are consistent with their views. To do otherwise would by hypocritical. Nobody claims bias on the part of stock bulls/bears because they own/don’t own a stock respectively.

    True bias is exhibited by someone who gains from increased prices but is a producer of the asset rather than an investor, i.e. a developer, or someone who earns income from transactions, i.e. a realtor or a bank.

  20. jesse Says:

    “The various bullish/bearish arguments over Vancouver real-estate, I think, all have to be taken with a grain of salt. “

    Look at the argument, logic and data and ignore the biases. It sounds like a simplistic argument to take all the predictions and average them out to determine what’s going to happen.

    It’s pretty obvious to me the most likely outcome is a return to where investment properties are good investments based upon future cash flows and not blind speculation. Who cares what my biases are? Argue why this will not be the case and see how well it stands to scrutiny under rational debate. Ad hominem is not rational debate.

  21. jesse Says:

    “All I know is I hear people waiting for another 10% price reduction to get back in the market.”

    You will hear this all the time, not just now. I heard it when prices were 10% higher yet still prices drop. Why is that?

    The question is how many of the “10% less and I’m buying” types are left compared to those who want or need to sell? Sure they are willing to buy with -10% but what discount is required to set the eventual bottom? What you are arguing is a perpetual speculative premium since rents, even with prices -10% from curent market values, do not produce adequate return on capital for a rational investor. It is a rare occurrence that a speculative premium does not return to zero eventually.

    What really brings the market down is cold hard balance sheet realities, not “sentiment” as we hear so often these days. Even with positive sentiment, speculation is going away. Investors and banks will see to that.

  22. househuntvictoria Says:

    Am I alone in finding the bullishness across political spectrums strange? It would seem to me that the more socially minded politicians would take the long view of affordable housing, created by the market, being a good thing. From the free market class, I’d expect good news all the time, a la Rennie et al.

    I guess once you get the keys to the house, you must do all you can to project its unfailing growth.

    The whole way up we heard stories about how according to history real estate has “doubled” every decade, or how prices have always rebounded after corrections.

    It’s too bad these guys can’t be honest now and acknowledge that prices are: a) still going down; b) no one knows when they will stop going down; c) when they do stop going down, historically they have remained flat for several years before showing any trend towards consistent increases; and d) when that begins, it has taken, on average, 7 years to get bak to the previous peak price.

  23. vancityguy Says:

    I over-generalized, but my opinion in regards to why certain camps subscribe and promote either overly bullish or overly bearish predictions is, more than likely, because there is an interest riding on such predictions. Unless such predictions come from a strictly academic source, such vehement calls to the up or downside come, at least in part, from a bias. Whether that bias is based on ownership, desire of ownership, or speculation, you can’t argue that any prediction comes strictly from fundamental analysis. There is always bias.

    That said, the natural question is why I’m bearish. By my own logic that would mean I want to enter, right? Well, no, so I contradict myself. I’m just referring more to the zealots of both camps – no one is that patriotic who doesn’t have a dog in the fight.

    “Nobody claims bias on the part of stock bulls/bears because they own/don’t own a stock respectively.”

    That’s just flat out wrong when it comes to equities.

    Aside from the plethora of analysts who increase or decrease price targets for certain equities based on their firm’s holdings, 2008 and the dummy-AAA ratings should have cleared up any lingering doubt that, when it comes to equities, the firms are by and large after commissions and revenue from transactions rather than truly sound investments. Further, take a look at which equities certain analysts put a sell rating on, and likewise check the an increase in short positions on that equity – derivative positions definitely determine bias.

    This happened only recently concerning a coal discovery in Saskatchewan, Canaccord was short 5 million shares of in heady market and had to cover, so their mining analyst comes out in the Post and slams the play, a few days later after the price had fallen somewhat, there was a 5 million share cross for everyone to watch. There, problem solved, thanks, in part, to ‘unbiased’ analyst reporting.

    “True bias is exhibited by someone who games from increased prices but is a producer of the asset rather than an investor”

    Totally correct – welcome to the IPO game on the TSX Venture. But you buy anything, whether an equity, a condo or a pork belly, you’ve got a bias until you sell it.

    “It’s pretty obvious to me the most likely outcome is a return to where investment properties are good investments based upon future cash flows and not blind speculation.”

    Get comfortable, it’s going to be a while.

  24. condohype Says:

    Live Q&A with Gary Mason at the And how appropriate to our conversation — right off the bat, he says he expects the market “will begin to rebound in a couple of years.” He’s also answering questions about pre-sale contracts and why Millennium was chosen. Worth reading.

    BTW, excellent discussion here. You’re all making me proud. Keep it up.

  25. jesse Says:

    “Get comfortable, it’s going to be a while.”

    Why do you say that? Because there will always be investors willing to accept poor yield in perpetuity? That would be quite unusual; it was only 6 years ago when investment properties had decent returns for the risk. Though 6 years ago means SIGNIFICANTLY lower prices.

  26. dingus Says:

    I think he’s just saying we have a long way to go down, contrary to the Pollyanna / degenerate gambler statements coming out of the local pols.

    Even Gregor was spouting some of that stuff, although to be fair he seemed a little baleful about it. Saw him say in a news clip last night, something like “we might break even if we get a quick bounceback in the housing market”. At which point wifey sprayed Chardonnay through her nose and said (and I quote): “BA-HAHAHAHAHAHAHAHA!”

    It just seems so amateurish. There’s no reliance on any financial model or prognostication, no sophistication about the current state of the market. No models, no projections, no sober analysis. Just that gambler’s hope that the losing streak is just temporary and we’ll get hot again, don’t worry. Baby needs a new pair of shoes, c’mon lucky seven!

    November was the denial phase. This, I think, is the bargaining phase. unfortunately, I think taxpayers have preceded politicians into the anger and depression phases.

  27. anon Says:

    Real estate will drop back to 1980’s values, and stick for decades. Appreciation won’t even keep pace with inflation.

    They don’t call it a Depression for nothing, and this one will make everyone alive forget the first one.

  28. jesse Says:

    ” I think he’s just saying we have a long way to go down”

    Yes but, really, how many are actually going to sell on the way down? Sales are going to be significantly lower than in the past meaning only so many can fit through the door. The rest…

    Here’s one for you: in the US the developers were the first ones to drop prices with incentives then outright cuts to clear inventory ASAP. They saw the writing on the wall and wanted to be first in line for what little money was left. I’ve heard Vancouver City is the “de facto developer” of MW at this point. Do you think they’ll be as wily as their now brethren down south and clear the books fast? I’m skeptical.

  29. M- Says:

    Jesse: I agree. When beholden to a taxpaying public that believes the hype (hope), it becomes politically impossible to clear off the books. When the city finally capitulates and liquidates MW, that’s a good ‘buy’ indicator.

    Heck, thinking about it, the developers that really hold the power will liquidate their developments while suggesting that a recovery is just around the corner, thus ensuring that their condos sell. Meanwhile, the pool of willing buyers shrinks, until finally there’s nobody left to buy, then the developers will relent and allow the illusion of future wealth to fade…

  30. M- Says:

    …And Onni’s first out of the gate!

    Evidently, Onni doesn’t believe a recovery to peak value is just around the corner…

  31. Jim Says:

    I do a lot of research daily.

    What I have been reading everywhere between the lines (you have to do that because there is a lot of “jawbone-ing” and poker playing) has been very consistent since early 2007 when I began my research. The trend is down, down, down when it comes real estate!

    It is a very good thing for me that I began my research far away from BC because the local kool-aid is only now starting to sour long after the entire planet has already clued in to reality.

    Based on that information, I sold my modest Metro Vancouver property which was my only property in late 2007. I realized that as a very ordinary, average, very middle-class Canadian I would never again in my lifetime have a chance to cash-out of such a big game.

    A game that I never wanted to be in and was always totally disgusted with. This game now known worldwide as the real estate bubble.

    The damage done to so many citizen left out in the cold and in the moldy basements and crumbling bug-infested housing in Metro Vancouver is heart-breaking.

    The trend worldwide is down, down, down for almost every asset class today. Everone at this point who is not already in cash on pretty much anything will tell you otherwise. Especially politicians, your local media types and real estate professionals and their “experts”. After all they are all heavily vested in this game. Their fat salaries have allowed them to buy into this real estate bubble quite handily.

    It always amazes me that all these folks telling the People not to worry are never asked what their personal interests are in this game called real estate. Just one example.. Larry Campbell (according to a rare sharp pencil in the press) has one or two condos in the Olympic Village which he failed to mention when he came out to the rescue of the project very recently.

    I have to say a big thank you to CondoHype,PaulB,Mohican,VHB and a few other very bright local people on the local Blogs for saving me a tremendous amount of money that I would otherwise have lost had I not sold my only home in December 2007.

    I understand the need for being vigilant and very well informed when investing in stocks and bonds and gold and oil. Those are not basic necessities of life. But housing is a necessity. It just stinks when you are fortunate enough in our society to be able to purchase a HOME but you have to do it amongst the sharks, piranhas and snakes and not just a few but legions of them. It was not always so and after this recession/ depression/slow-down (pick your flavour) may it never be this way again.

    Here in BC the news for the masses comes from Gordon Campbell and his brother Michael and CanWest. Talk about a one horse town!

    If it were not for the illuminated minds on the local Blogs and a smattering of smaller media outlets there would only be the prevailing “buy now or forever..”, “it’s different here”, “best place on earth” pablum being fed daily to the population.

    I am currently renting at a very reasonable rate.

    I have owned two properties in BC (one at a time) since 1989 and have watched in dismay and disgust what has happened in BC and in the Lower Mainland to housing for the poor and middle class. What a shame.

    When the cost of buying a home returns to historically normal levels (nominal or real I’m not greedy) I will buy myself a home I can live in.

    If society chooses insanity then insanity it will be. Somehow, I believe the free market will correct this bad behavior. Mr. Market has had a bout of mental illness these last few years. I am banking on Mr. Market’s return to a more balanced psychology when it comes to homes for the not-so-greedy.

  32. blueskies Says:

    re: Onni

    if the Beasley is not going ahead
    how would that make Larry Beasley feel?

    …maybe we should talk to Frank Titanic
    for some insight…. 🙂

  33. whiterock Says:

    what is that yellow product on some of the walls in the picture of the unfinished condos. What is it going to be covered with? Stucco? Will it be rainscreened? Anybody know?

  34. blueskies Says:

    the “yellow product” is a sticky substance that will
    hold in place all the $20 and $50 dollars bills that
    will be used to decorate the building….

    see! it really is “green”

  35. dingus Says:


    It is all unfolding as the prophecies foretold!

    Onni’s slashing prices on 350 units. In December, according to Paul B’s site, all of 417 condos sold, and there is inventory of 7500 existing listings. 5% of the market is now priced to move.

  36. patriotz Says:

    when it comes to equities, the firms are by and large after commissions and revenue from transactions rather than truly sound investments.

    Um, that’s what I said too. Why don’t you read my post again. I talked about people talking bullish positions when they were really selling, i.e. bears, or simply profiting from transactions, i.e. not investors..

    My point, which I will explain again, it that it is not bias just for a holder of stock X to be bullish on stock X. The holder of the stock is simply acting on his views. Nor is it bias for someone who is bearish on stock X not to hold the stock. If someone is not bullish on a stock he is not going to hold it. Is that hard to understand?

    Similarly it is not bias for an owner of RE to be bullish on RE. They own RE because they are bullish. Obviously I am talking about investment properties here, one can be bearish on RE and not want to sell their personal residence for intangible reasons.

  37. jesse Says:

    20-40% off? It’s a shoeBoxing Day sale! I wonder how many of those units are actually “40% off” … let’s wait and see what that really means. I wonder if that includes “free” upgrades with the markup or if it’s all straight price reductions.

    Who said the Hype is dead.

  38. Publicus Canada » Blog Archive » Morning Brew: Not as bad as other things that are also bad. Says:

    […] Don’t count on a market rebound. After all, the market isn’t LaBarbera. […]

  39. vancityguy Says:

    “it is not bias just for a holder of stock X to be bullish on stock X. The holder of the stock is simply acting on his views.”

    So if I am bullish, I own it. And if I own it, my view then is not bias but rather a reflection of my views. So if you truly believe your views, then bias doesn’t enter the equation.

    That’s a quaint way of explaining what bias actually is, please explain to me how that is not bias – investment, regardless of what it is, is speculative, and thus subject to bias.

    Somewhere in here I think bias has earned a negative connotation, which isn’t necessarily the case.

    Regardless, maybe investment real-estate differs, but I’ve been in finance long enough to know that bias and perception play a factor in each and every single investment. Period. If you really want to believe that the market is completely bias-free and based on fundamentalist views and sound valuations, you might want to take a look at the notes in any given quarterly of any given TSX company, watch derivative markets for only a single week, or explain to me the a negative yield on 3-month U.S. treasuries. And if you still don’t see it, purchase yourself an index pegged fund and rely on ‘fundamentals’ or the efficient market hypothesis, and enjoy marginal gains.

    Bias isn’t bad, but bias is intrinsically linked to absolutely every investment decision. Everything, ultimately, is speculative – Bear Sterns, Lehman Brothers, Nortel, Vancouver real-estate, if investment was not speculative then there would actually be such a thing an air-tight investment, which unless you’re investing in the taxman or the grim-reaper, doesn’t exist.

    Bias even plays a part, even in both yours and my respective views. Don’t confuse legitimate fundamental analysis with unbias – one of the first lessons is law is that EVERYONE has a bias on EVERYTHING. It’s human nature.

  40. J Says:

    The yellow stuff on the walls is insulation. Yes, it is covered. My basic knowledge of construction techniques cannot tell you if it is or will be rainscreened, but I think that not being rainscreened would be a substantial liability.

    As for Onni – velly velly interesting. Onni’s move will probably create additional downward pressure on resale homes.

  41. patriotz Says:

    That’s a quaint way of explaining what bias actually is, please explain to me how that is not bias

    Owning an asset because you are bullish on it is not a bias. It’s being bullish in itself that is a bias.

    One more time – people aren’t bullish on assets because they own them, they own them because they are bullish.

    Again, this does not include personal residences which are bought, sold and held for other reasons than investment return.

  42. mk-kids Says:

    Onni is using this “firesale” to gauge where the market is at. Since nobody is buying, nobody knows what it will take to pull in the fence sitters… I heard it on the radio so it must be true.

    I will laugh sooooooo hard if Onni holds a firesale and nobody comes.

  43. M- Says:

    Onni has indicated that most of these units are those of failed flippers– people who couldn’t close, who’ve lost their deposits, and who may be on the hook for even greater losses still.

  44. VHB Says:

    “if the Beasley is not going ahead”

    My ideal was for the Beasley to be one of those half-finished hulks with frayed tarps blowing the wind for a decade as pigeons deficated on the fading condo-hype sign board. In my dream, there is a twin building in the same state next door called ‘The Rennie.’

    These would be fitting monuments to two of the key people that drove our incipient urban disaster.

  45. dan Says:

    I think its time to change your “condohype” name to something more olympic.

  46. RossK Says:

    Jim (upthread)–



  47. foo Says:

    VHB, hahahahaha

  48. thu Says:

    It won’t matter how low prices go, unless you have $350,000 stuffed in your mattress, no one is getting a mortgage these days because the banks have simply run out of money.

  49. anon Says:


  50. blueskies Says:

    because the banks have simply run out of money.

    the banks haven’t run out of money…
    they are merely hoarding it for their own
    liquidity purposes..trying to borrow it is
    the difficult part……

    banks exist to perpetuate their own
    continued existence, customers are
    just a pain in the butt…..

  51. CJ Says:

    The photo is excellent — the mud, the slack orange plastic fencing, the exposed insulation, everything reflected in the puddle, the empty street. Maybe the photographer could create a slide show of failed condos. Ratty tarps on roofs, dilapidated netting, water-covered balconies, poster-covered hoardings, peeling billboards — a whole new art form.

  52. VancityAllie Says:

    These are the same sort of people who said gas would never fall back under a dollar.

    I have nothing much else to say because Vancity Guy and Urban Dweller have pretty much said it all.

  53. patriotz Says:

    the banks haven’t run out of money… they are merely hoarding it for their own liquidity purposes..trying to borrow it is the difficult part……

    Nonsense. The banks are obviously lending out money, because they are paying interest on deposits. If the banks were just hoarding money, you would have to pay them to keep money in the bank.

    Not too hard to understand is it?

    They banks have simply returned to the good old days when borrowers had to prove that they have the means to pay the loan back. This is what people are calling a “credit crunch”.

  54. dg Says:

    “Nonsense. The banks are obviously lending out money, because they are paying interest on deposits. If the banks were just hoarding money, you would have to pay them to keep money in the bank.”

    Paying interest on deposits, hardly.
    Also banks make money by charging fees for everything including hoarding YOUR money.

  55. sluggo Says:

    Anybody even thinking of buying now must be really really stupid.

  56. patriotz Says:

    Paying interest on deposits, hardly.
    Also banks make money by charging fees for everything including hoarding YOUR money.

    What are you talking about? You can get up to 4.3% on a 5 year GIC.

    Here’s another question for you: if the banks have all this cash sitting around that they are “hoarding”, why don’t they use it to buy back all their outstanding bonds that they are paying interest on?

    Use your head.

  57. Accentuate Home Staging Design Group Blog » Sell your house for high return – even in an economic downfall Says:

    […] have accepted the fact that no matter where you are (and Vancouver is no exception) the bubble has burst or is bursting in the housing market.  Call me an optimist, but there is […]

  58. dingus Says:

    Most banks have taken steps to increase their capital ratios, mostly through issuing new equity. Most are now well above the regulatory minimum capital ratio. No doubt a defensive move to increase stability if some assets start to go sour.

    Not sure this constitutes “hoarding” money. It appears banks have been continuing to lend to individuals at a relatively undiminished clip, though they have cut back some commercial lending in at risk sectors (energy, mining, forestry, ah… real estate). The Finance Minister was blustering about the banks being reluctant to lend, but he has since recanted. Tight lending conditions do not currently rest with the banks, but in the commercial paper market, no doubt due to risk aversion and general nausea. But the banks are an easy target for cheap political points, as folks will just eat it up. Case in point above.

  59. Richard (permabear) Says:

    one thing many are not considering is this: COST OF BUILDING. the true value of a home is simply calculated by this LAND + LABOUR + MATERIALS. to be generous we can leave land values flat at todays prices. Labour costs will fall and material costs have fallen over 60%+ peak to current trough in commodities markets. these price declines will show up in actual products in about 12 months. a year from now you wont be able to sell your used home for more than the cost of a new one as the BUILDING depreciates in value as it ages. nothing gets more simple than this. incomes dont matter as much as the true cost of housing.

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