Hot Air

Balloon Truths?

Four Hot Air Balloons

“The simple truth remains that for every deal closed in Greater Vancouver, approximately two to five unsuccessful purchasers jump back into the fold. The benchmark value of detached homes increased 19.5 per cent to $788,499, while condominiums increased 15 per cent to $385,487, when compared to January 2009. The benchmark price for all residential property types combined is up 17 per cent to $573,241—nearly one per cent higher than the all-time market peak in May 2008. The looming Harmonized Sales Tax (HST) and threat of interest rate hikes later in the year has added fuel to Vancouver’s already robust real estate market in 2010. Rising confidence is also a considerable factor. Purchasers are more secure in their belief that the worst of the recession is over and the prospects going forward are brighter. Given the framework that’s taken shape, the momentum is expected to continue unabated through the second quarter. Little relief is expected in terms of supply in the short-term. Rising prices may entice potential sellers in coming months, helping to ease the inventory crunch closer to mid-year.” Quote the RE/Max Market Trends Report 2010 – market opinions provided by Remax brokers in 16 major Canadian markets.

Roar and Heat

Have you been near an operating hot air balloon? While predominantly considered a safe experience, you might recall that in contrast to the quiet peaceful flight the burner’s huge flame is both noisy and hot. Your first reaction might first be to plug your ears to lessen the noise and second, to take caution not to get burned. With those basic precautions in mind, you will probably enjoy the ride.

Considering a ride on Vancouver’s real estate balloon? Similar precautions may apply.

About Larry Yatkowsky

Larry is a recognized real estate expert. A veteran professional, his experienced counsel leads Vancouverites in his west side community to place their trust in a man passionate about his work. Uncompromising ethics bring a balanced approach to realizing your real estate dreams.

When Life Moves You - contact Larry:

*Disclaimer: Statistics Courtesy REBGV. While believed to be accurate they are not guaranteed.
**Numbers provided may vary as they are dynamically posted by the REBGV.

Reader Comments:

1 Says:
February 25th, 2010 at 9:42 am

Larry,

Interesting and intriguing insights, as always – and always appreciated.

This is an odd time. Will Re/Max be right? I think there is a case for it – listings have not zoomed nor sales stalled – yet.

What keeps me watching with keen interest is my expectation of a dramatic change on both of those metrics – when? That’s the zillion dollar question.

I can tell though – you are bearish. Good. That’s a sign.

February 25th, 2010 at 10:12 am

@ 1
I’m only wrong 50% of the time. 🙂

1 Says:
February 25th, 2010 at 10:13 am

BearyLarry

This time you are on the right track.

Gravity and fundamentals always come through in the end.

February 25th, 2010 at 10:19 am

@1
LOL – one thing that may be missing in the formula is “influence”. It may not make sense and is the hardest to predict.

1 Says:
February 25th, 2010 at 3:21 pm

110 Patiently waiting on 02.25.10 at 4:51 pm Based on a sepcific set of criteria, I track house sales and listings in the White Rock South Surrey area of BC on a 30 moving average basis. Listings are up by about 60% from November, and sales are down 40% over the same period. I suspect I would find similar stats in tracking other areas of the lower mainland.

from greaterfool.ca, fyi

John Says:
February 25th, 2010 at 5:37 pm

Overall sentiment within the general public is still bullish. Question is – what would need to happen for this to swing the other way?

Interest rate rising? Unlikely to be a big factor in the short term as any big increases would cripple the rest of the economy.

HST? I think people have already factored this in, it may affect new home purchases going forward and indirectly boost the resale market.

However if REMax is correct and people are jumping in before interest rates rise and before the HST hits, what will the market be like afterwards? Double whammy of fewer buyers and higher interest rates/HST would cause a demand vacuum would it not?

1 Says:
February 25th, 2010 at 5:50 pm

John,

I debate this with myself constantly. Could you see the (whats left of it) rush of sideline wannabuyers be met with an even large wave of sellers looking to lock in/maximize profits?

ie. could listings blow higher while sales…don’t?

Could the market just tire out in a post-Owelympics/debt/deficit reality realization?

Or am I completely out to lunch?

Mikey Says:
February 26th, 2010 at 9:00 am

Hi Larry –
I am a frequesnt lurker on your site, and I enjoy your commentary.

I contribute to your “page hits”, but I have never commented here before.

I would be interested in hearing from you, in a comical-post perhaps, on who these buyers are? The butcher, the baker, the candlestick maker?
The rich asian, russian nobility, boot-strapped school teacher?

Cheers,
Mikey

February 26th, 2010 at 9:44 am

@Mikey
Welcome! Feel free to chime in anytime.

To your question. The Buyers you ask about are all of those you mention and more. Waxing philosophic –

They are the first timers on strict budgets, the young family needing more room to grow, the retired empty nesters looking to make life a litte more simple, the upgraders who seek to improve their neighbourhood, home, amenities. The downgraders who by fortune or choice, seek to lighten the financial burden load. There are the professionals and the workers, laborers all.

In this city as in others it would be remiss to exclude the bears and the bulls who speculate – some with real money and others not so much, some who have captured the holy grail, some who dropped the chalice, some who wish they had made “the right” decision. There are those who seek to hide their wealth and those who seek to advertise it. Amongst all, are the foolish and the wise whose common thread is to achieve what they dream. For the majority young,old,wealthy,poor – that dream is simply to have a place they call home.

Tom W Says:
February 26th, 2010 at 9:47 am

At any price.

We know how the story ends

In tears

Always

February 26th, 2010 at 10:00 am

@ John
You could be out to lunch or you could be right on all counts in the short term. The bulls say your thinking is wrong. The bears say it is right.

The problem is that you are seeking perenial answers to perenial questions to which only history provides solutions. Simply there is no definitive answer ‘today’ other than to make a decision to get on the train or stand at the station. Certainly if the negative side prevails you will feel you have made the wrong decision however, if history is the story, then like a cut on your hand it will in time heal and you will be complete once more oblivious to the fact that you ever had a cut. At least, that has been the story of real estate in this city as in many others. For Vancouver, this is not the first nor last boom/bust cycle.

The hook – when it is time to cash in your chips, will you have more of them then when you started? The trick – to make certain you are able to stay in the game long enough to make that next decision.

February 26th, 2010 at 10:08 am

@Tom W
– ‘always in tears’
Not so Tom!
This book is never complete. One must keep in mind that small pieces of a shattered mirror can still reflect many smiles.

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