Vancouver Real Estate! – It Could Be Worse

Stuff

We worry about stuff. We worry about things like our inability to change the outcome of Vancouver Real Estate’s market malaise.

Looking back, Governor Carney’s alerts could be viewed as signs of warning. One wonders if he could have been more clear? I don’t know the answer to that but I did see this sign that left no doubt – it is very clear.

Worse on Kalia

A moist tropical breeze embraced me while walking along Kalia Road. The street was congested as it was Honolulu Marathon time. Seduced by the breeze this casual walker needed to be mindful of traffic on the ground as well as traffic from above.

The street sign served a cautionary alert. The meaning never in doubt. Much more clear I thought than the signs given by Carney. It would have been nice I thought, if Carney had put out signs like these. Signs that leave no doubt that things could get worse.

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:

Boombust Says:
December 19th, 2012 at 6:37 am

Oh! There you are, Larry.

Beginning to get a littled worried.

December 19th, 2012 at 8:41 am

@boom
LOL! Scanning the obituaries were you? 🙂

eastvanspecial Says:
December 19th, 2012 at 10:21 am

No one heeds warning signs seriously until they get hit on the head or have a near miss.

Simple Says:
December 19th, 2012 at 10:23 am

Hey Larry,

Carney actually sent me a warning sign like this about 18 months ago and I forgot to forward it on to the rest of the country. My apologies.

I have posted it here: http://postimage.org/image/tsjuw1ytt/

December 19th, 2012 at 11:26 am

@simple

Our children need homes too!

Ray Says:
December 19th, 2012 at 6:06 pm

Those coconuts are like flying spaceships, moving horizontally until they get you good.

vangrl Says:
December 19th, 2012 at 6:18 pm

nice eastvanspecial:)

December 19th, 2012 at 8:37 pm

@larry

Just like no one is taking the Mayan Doomsday seriously. BTW, it’s coming up on December 21, 2012.

As someone said, we only heed those warnings that we WANT to heed.

I have been renting for two years and heard the warnings clearly and heeded them. I am amazed at the speed of the decline though.

Now, Realtors like to warn me, “Stop paying the Landlord’s mortgage, you are throwing your money down the drain”. I didn’t heed that one.

At some point, the economic fundamentals take over and that time seems to be now. Prices have a way of overshooting to the up side and then overshooting to the downside.

IMHO, it’s going to get a lot worse before it gets any better. Simple reasons, the net new Buyers have had their wings clipped by the Feds and the enormous debt they have racked up means they are very much hindered and the move-up buyers can’t come to terms with the transaction costs that are involved in the Sell and Buy transactions.

Remember the other warning by Governor Carney, “the next move in interest rates is going to be up”!

Rf Says:
December 19th, 2012 at 9:24 pm

Anyone who claims Carney (and Flarhety for that matter) didn’t give clear warnings….honestly….they were too busy hearing only what they wanted to hear.

“I didn’t think this could happen” should be the new motto for overspending helicopter parents and everyone else who thinks real estate is a never ending, never-losing party.

Just wait until all the young realtors realize they havent had a paycheck in 6 months….
Some of them may actually have the guts to tell their clients that if they actually want to sell they’re going to need to be the first one to hack their price. Of course, they might hack the price on their own spec condo first…

December 19th, 2012 at 9:36 pm

@lookout

“new Buyers have had their wings clipped by the Feds ”

don’t think they are exclusive in this regard

December 19th, 2012 at 9:47 pm

@rf

“Just wait until all the young realtors realize they havent had a paycheck in 6 months”

at a very early stage in my career a senior realtor told me that everyone is entitled to come into this business and take the chance that they will go broke. A 30 year perspective tells me that it takes a lot of ‘mind bending’ work to deal with people, a inordinate amount of off the grid time and the ability to accept that as a Realtor you aren’t going to be everyone’s friend. If you can get past those hurdles you’ll probably be ok.

As for Carney’s warnings there isn’t much to be said about that.

Bally Says:
December 20th, 2012 at 10:31 am

I like how the coconuts are aimed at their heads. That’s one vindictive tree! Also the women looks like her head is on fire. Dangerous place Honolulu.

Groundhog Says:
December 20th, 2012 at 10:47 am

I remember numerous warnings from Mark Carney, 30 seconds on google brought me to two good ones…

A link to the Whispers Blog posting in June, 2011 titled “Yet another warning from Carney”: http://whispersfromtheedgeoftherainforest.blogspot.ca/2011/06/yet-another-warning-from-carney.html

An October 2009 G&M article titled “Carney urges prudence in housing market”: http://www.theglobeandmail.com/report-on-business/carney-urges-prudence-in-housing-market/article1204008/

Not sure what more you need when it comes to warnings. You can’t expect him to tell people flat out the market is a bubble and set to crash significantly, but his warnings were straightforward and clear.

December 20th, 2012 at 10:54 am

Here is another warning to be heeded.

At the recent Federal/Provincial Finance Ministers’ Meeting at Meech Lake on Monday December 17, federal Finance Minister Fleherty said:

“A significant number of Canadians are not saving adequately for their retirement,” Flaherty told reporters”.

The agenda topic was the Canada Pension Plan. So the CPP plan, instead of being made a little more generous to help all those Canadians not saving enough for their retirement stays the same for the time being and the topic gets revisited at the next meeting in June.

Here is the Real Estate connection; for most of the baby boomers now retiring daily, their house equity IS their retirement plan. As they downsize, it will, of course, have the effect of pressuring house prices downward.

For the sons and daughters of the baby boomers, who are spending huge amounts of their income on housing, well, what about their retirement plan ?? How can they possibly be saving anything when, in BC, the savings rate is -9%, that’s to say, the average household needs 9% more income just to balance their household budget.

I won’t be around when the next major wave of retirement hits our society, but I will surely try to pass this on to my off-spring. Save now, the general rule is 10% of income.

At least, I warned them!

Ralph Cramdown Says:
December 20th, 2012 at 10:59 am

As a potential first time buyer, I’m a bit miffed that CREA, CAAMP and the like are off to Ottawa to misrepresent to Finance what my problems and needs are. From what I can see, when they say “first time buyer,” they really mean “people without any money.” One of those groups sounds somehow more worthy of help than the other.

December 20th, 2012 at 5:09 pm

@groundhog

“You can’t expect him to tell people flat out the market is a bubble”

Why not?

December 20th, 2012 at 5:12 pm

@lookout

maybe there should be financial warning tattoos. that way you can never say you didn’t know. 🙂

Alan Says:
December 20th, 2012 at 5:49 pm

Larry,

I don’t see how anyone could not have heard the warnings for the last 12-18 months. It was broadcast by real estate scaremongers and dooms-dayers for months including warnings by Flaherty and Carnie

The fact remains that any asset class cannot sustain the kind of growth year after year without some kind of pause or correction, which in my estimation started as a pause rather than an economic event that derails economic activity and investment. You only need to have potential buyers choose to sit on the sidelines in greater numbers than buyers to precipitate a correction in real estate. I don’t see any problem with this market unless you have inventory that you need to move.

A general bottom and recovery in the US real estate market will usher in another cycle of real estate “up” cycle within the next 12 mos.

December 20th, 2012 at 7:03 pm

@Alan

“I don’t see how anyone could not have heard the warnings”

if your head is down looking for pennies would you have seen the falling coconut sign?

December 20th, 2012 at 9:42 pm

@larry

“maybe there should be financial warning tattoos. that way you can never say you didn’t know”

Larry, I am sure you have heard the phrase:

‘”it was not a fish that discovered water”.

For the past decade or so, people did not need to think in order to buy a place, you just bought because everyone else was doing it and they had all made money. It was a great party.

But times change and all partied come to an end, usually with a big hangover that causes some pain and forces people to regroup mentally. Isn’t that what capitalism is, asset prices fluctuate, no matter if the asset is real estate, Apple stock, the dot.com bubble or Tulip Bulbs.

Think of it as a cleansing process where prices find their new equilibrium, albeit eventually.

December 20th, 2012 at 10:25 pm

@lookout

I remain unconvinced that everyone bought a home just bought because it was what others were doing. Perhaps my experience was different as I can say that all my clients actually wanted and needed a home to live in. Admittedly, the ‘up’ market accelerated their ability to obtain more space or what they believed was a better neighbourhood in a shorter time they didn’t buy just because it was fashionable.

However, it is probable that some may have done as you imply but one then has to ask how many. I don’t have the numbers that would counter or confirm this idea.

Will that number render an apocalypse – unlikely. But I’ve been wrong before 🙂

rf Says:
December 21st, 2012 at 8:55 am

Larry, you make it sound like it’s up to the government, rather than the market, to decide who makes or loses money.

December 21st, 2012 at 8:27 pm

@rf

No one will ever claim that it is up to government to determine your wealth – that just can’t be! But suspect it is that if you have an inside track on which way politic will role you could find it very helpful in predetermining how full your pockets will be. Course that’s probably old news.

Smoking Man Says:
December 23rd, 2012 at 10:16 am

Great article in yesterday’s Globe and Mail about the Emili computerized assessment approval system for cmhc….you see who’s swimming naked when the tide goes out, as she is now….

Common to hear “westside prices are falling $1,000 per day” now….if the market is weak in the coming months, watch the wheels come off…

We live in interesting times…and remember, EVENTUALLY rates will rise, which will be another headwind to contend with.

Advice – STACK CASH (or stocks/bonds/etc.)…STACK IT STACK IT STACK IT…and wait.

Village Whisperer Says:
December 24th, 2012 at 2:01 am

Merry Christmas

left already Says:
December 24th, 2012 at 11:11 am

Carney will go down in history just like Greenspan did, with a big flaw in his model.
His warning were meaningless with interest rates at 0% he robbed the savers and continues to do so while inflating a debt bubble of gigantic proportions in BC.
Had the interest rates not been so low, we wont have such high real estate prices, it is so simple, yet people keep praising Carney for his “warnings”. Beyond belief!

December 24th, 2012 at 12:24 pm

@Joe

Any real estate software I’ve seen that is built to determine market values run into generalization problems that preclude exact results.

Examples: Redfin, Trulia, Zillow and others exhibit similar a problem.

As to the appraisal issue – I’ve worked with really good guys with professional integrity who know their stuff and others that just do a ‘drive by’, ask what the place sold for and submit that figure as their appraised value.

December 24th, 2012 at 12:25 pm

@Smoking,

yah well that is all fine about the stocks but land don’t burn.

December 24th, 2012 at 12:26 pm

@village

Thanks and may I wish the same to you. Keep up the good work. See you in 2013 🙂

December 24th, 2012 at 12:27 pm

@left already

interesting perspective

December 24th, 2012 at 4:26 pm

@left already

So true. We often hear that Canada came out of the recession much quicker and more robustly that the US did, but no one stops to ask why? I mean, what so special bout our environment, when compared to

You hear that the Canadian Banks are much stronger than their US counterparts and did not need a bailout because we did not have the sub-prime mortgage issues. Really, but the Finance Minister did buy about $75 billion dollars of toxic mortgages from the banks. I’d call that a bailout, wouldn’t you?

If you read the Globe and Mail article on the CMHC’s EMILI automated system and how it may have manipulated house prices upwards and Therefore bigger mortgages would have been granted by the Banks, that pretty much smells Ike sub-prime to me. If the “soft landing” becomes a hard one, lookout because the Canadian taxpayer will be on the hook for any losses incurred by the Banks.

Last point, the people that we are expecting to engineer the “soft landing” are the same ones that got us into this fine mess in the first place. I would agree with you, Carney is over-rated and the Brits are going to find that out starting July 1 next year. Gotta give home some credit, though, he know when it’s time to bail and leave the tough problems to someone else.

Matt Says:
December 26th, 2012 at 8:24 pm
December 26th, 2012 at 10:14 pm

@Matt

It sounds brutal.

– lets hope CMHC doesn’t burn through the $12 billion.
– will banks stocks get slammed – they too have had a pretty good run as well with the can’t “lose on this loan” rule.

And may I ask – what do you think about this?

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