温哥华房地产市场走向分析
By
humper
Posted - 5/12/2005 12:56:28 AM at
www.discovervancouver.com
wow, another long
post? not likely. it's
after midnight already. adrenaline still up from
volleyball.
okay... some history lessons.
housing prices kept on rising and rising from a
cheap $5,000 house in the 60s... to the $600,000 house you see today.
reasons?
demographics. that
generation helped pushed housing prices sky high.
declining interest rates while the baby boomers
started to buy which was roughly in the mid 1970s.
rising income. the
combination of rising incomes and declining interests has a compound effect
on price increases.
working wife and second income which although a
part of rising income but it's important to mention alone.
the arguments of supply and demand only makes sense in very crowded areas,
e.g. Manhattan Islands... in most places here in North America, there's lots
of space to expand.
okay... some of the dips experienced in
Vancouver.
80s... when Paul Vocker shot
up interest rates to combat inflation. housing
prices crashed 30% to 50% in some places.
1992-1993... when Alan Greenspan shot up interest rates
(doubled from 3% to 6% in a year's time) to combat inflation.
here in Vancouver... didn't impact us as much
because we had Asian money coming in. but in
Toronto, prices dropped 30%... same in the rest of North America.
and a lot of the real estate developers were
leveraged to the hilt... the Reichmann's lost their richest in Canada
standing.
1998 was a doozy here in Vancouver. Asians were
leaving to go back to Hong Kong. figured out
China was not a bad government after all. but
that's minor... so we get maybe 20,000 people emigrating out of BC to go
back to Hong Kong... big deal. the kicker was
the Asian Economic Crisis which then became the South American Economic
Crisis and that led to the Russian Economic Crisis and that led to the Long
Term Capital fallout. those currency traders
colluded and worked together... pure blackmailers. well,
that caused demand for BC goods to drop. And, what is BC really good for?
Exports of natural resources. Commodity prices
started tanking in 1998. and our
Cdn dollar was expensive and we couldn't compete
against the Chileans, etc. who had a devalued currency.
result? BC was in a major economic headache... can't blame the NDP
for this you know? So, commodity prices was el
sucko and when the world monetary markets
improved and stabilized in 1999, Greenspan decided to continue his upward
march in interest rates. it was bad. And, then
the stock market bursted in 2000,
businesses in America was tired of the Democrats and high taxes, and
it was conveniently election time, so capital investment slowed and the
States entered into a recession. Housing prices was still
sucky in BC.... but there were some signs since
people made oodles of stock market money in 2000 and plowed some of their
money back into real estate.... so we go to 2001, Greenspan decided to lower
interest rates to stimulate the economy.... and guess what did housing
prices start to do in Vancouver? go up.
and, September 11, 2001 was in a way the best
thing that has happened to the world economy. Osama Bin
Laden's strategy to hurt America really
backfired. Worldwide interest rates in every country lowered to levels not
seen since the Nifty Fifties. And, after the successful Afghan and Gulf
war, things just boomed and commodity prices are at 20 year highs... and our
BC economy is rocking... No thanks to the Liberals....
so... what happened in 1998? don't believe what
you read in the Vancouver Sun... there was a neat
pro Real Estate article today...
housing prices in Vancouver dropped really bad in 1998.
it's doubtful that 2006 will see a repeat of 1998...
not sure about 2008 though.
what happened in 1998?
the lower priced homes did not change in price
much. there will always be high demand for the
affordable homes and presumably they saw a correction in price throughout
Greater Vancouver.
what happened in West Side Vancouver?
hmm... mortgage interest rates of 9%... ouch...
BC stagnant economy so incomes were not rising. ouch.
the homes costing $800,000 or more dropped big
time in price... from $800,000 to about $650,000.
that's about a 23% drop. the luxury homes that were built spec for
the open market were priced at say $3 million... they sat on the market for
months and they ended up selling for say $2 million.
in richmond... a
$880,000 brand new house could not sell... prices dropped to asking about
$620,000. that's a 41% drop.... Richmond has to
thank the emigration that was leaving Richmond to go back to Hong Kong for
that.
and condos? contrary
to what the senior CMCH market analyst... sigh... the CMHC are mortgage
insurers whose purpose is to get more loans insured... they made $2 billion
in profit in 2003... so they have a vested
interest to see housing prices stay the same....
condos generally tank in price the most when there is a downturn... they are
the most volatile.
i have friends who
went through that crisis...
one girl bought a condo in richmond in 1996 for
$220,000. her 3 year term mortgage was up for
renewal in 1999. she had a high ratio 10% down
mortgage. in 1999, her condo dropped in price to
an assessed market value of $160,000. or
37.5%... she needed to inject equity into her condo.
her parents had to bail her out.
one couple bought a 2 bedroom condo in downtown
Vancouver in 1994... for $240,000.
they listed their condo in the market in 1998...
and there were very little offers... they were
engaged and wanted to move up to a house. they
ended up selling their condo for about $180,000 in 1999.
that's a drop of 44%.
so does the past price moves help you in maybe
predicting the market in say 2006, 2007 and 2008?
it's hard to forecast economics. it
won't be easy because the variables are so hard to predict.
china, demographics, commodities, deficits,
interest rates... just too many.
but I doubt it would
be bad as 1998.
globalization did one thing... it made the world
more efficient. companies merged and acquired
other companies so the levers of industry are concentrated in a few large
players. they control the supply of commodities
better, but there is still competition but just not as much as before in the
past. what we will see is presumably that commodity prices will remain
fairly high... it's well known that it takes roughly 2 years lag to reopen a
mine or start up a new mine. we have the supply,
except for electricity and oil but for most commodities, it is not hard to
ramp up supply. barring a war or some similar
catastrophe in asia, it's unlikely commodity
prices would retreat much to what we saw in 1998 to 2002.
and Canadian interest rates would lag that of the
States... which means it won't go up as fast. 40% of Canada's GDP is
resource based.
here in Vancouver, it's hard to quantify the
amount of correction but interest rates are definitely on the rise. Canada
can't really maintain that large of gap between the US rate... we are at
0.50 percent... i think the pundits are wrong...
they say interest rates won't rise until the fall... i
think after one more rate increase by the US Feds, the most they would allow
is 0.75%... and Cdn rates will follow.
in downtown Vancouver, the situation is so precarious and some exorbitantly
high that it would be wise for someone who bought a $220,000 Concord
Pacific 2 bedroom condo in 1996 to sell it for $670,000 and buy a house in
East Van, North Van or somewhere.
the black nightmare scenario is around 2013.
if BC doesn't find another industry or
industries to replace forestry, our economy will be in shambles. 80% of the
pine trees in the Interior will be lost to the mountain pine beetle.
we we will see a
decade of ravenous Interior forest fires. and a
1/4 of BC's GDP is forestry based. the nightmare
scenario is around 2012/2013. housing prices
here in Vancouver really don't look good any more.
that's why I support offshore gas drilling. we
need to find something to replace forestry.
some short post... this is way too long.
i think
i need to retire from this forum.
i found out about
this forum on Sunday but it's getting really tiring typing these long
messages.
hope the above analysis helps.
it's quite pessimistic in a way.
the Olympics is not that big a deal... The
infrastructure budget is how many billions? maybe
$10 billion... 20 tops... from 2006 to 2010... that's
$20 billion / ($156 billion X 5) = 2.5% / 5 years = 0.5% more to the GDP per
year. a 1% increase in interest rates would have
a greater effect on the BC economy than several Olympics. The
increaed net migration of people to BC would
have a greater effect on the economy than the Olympics.
The Olympics is just a symbol/a showcase. it's not the same as investing
and creating say a high tech, semiconductor industry here in BC.... once the
show is over... the more positive effect would be tourism... but Vancouver's
was already well known worldwide as a tourist destination. The Olympics
won't add materially more to that reputation in future years.
|
温哥华房地产市场走向分析
By
humper
Posted - 5/12/2005 12:56:28 AM at
www.discovervancouver.com
wow, another long
post? not likely. it's
after midnight already. adrenaline still up from
volleyball.
okay... some history lessons.
housing prices kept on rising and rising from a
cheap $5,000 house in the 60s... to the $600,000 house you see today.
reasons?
demographics. that
generation helped pushed housing prices sky high.
declining interest rates while the baby boomers
started to buy which was roughly in the mid 1970s.
rising income. the
combination of rising incomes and declining interests has a compound effect
on price increases.
working wife and second income which although a
part of rising income but it's important to mention alone.
the arguments of supply and demand only makes sense in very crowded areas,
e.g. Manhattan Islands... in most places here in North America, there's lots
of space to expand.
okay... some of the dips experienced in
Vancouver.
80s... when Paul Vocker shot
up interest rates to combat inflation. housing
prices crashed 30% to 50% in some places.
1992-1993... when Alan Greenspan shot up interest rates
(doubled from 3% to 6% in a year's time) to combat inflation.
here in Vancouver... didn't impact us as much
because we had Asian money coming in. but in
Toronto, prices dropped 30%... same in the rest of North America.
and a lot of the real estate developers were
leveraged to the hilt... the Reichmann's lost their richest in Canada
standing.
1998 was a doozy here in Vancouver. Asians were
leaving to go back to Hong Kong. figured out
China was not a bad government after all. but
that's minor... so we get maybe 20,000 people emigrating out of BC to go
back to Hong Kong... big deal. the kicker was
the Asian Economic Crisis which then became the South American Economic
Crisis and that led to the Russian Economic Crisis and that led to the Long
Term Capital fallout. those currency traders
colluded and worked together... pure blackmailers. well,
that caused demand for BC goods to drop. And, what is BC really good for?
Exports of natural resources. Commodity prices
started tanking in 1998. and our
Cdn dollar was expensive and we couldn't compete
against the Chileans, etc. who had a devalued currency.
result? BC was in a major economic headache... can't blame the NDP
for this you know? So, commodity prices was el
sucko and when the world monetary markets
improved and stabilized in 1999, Greenspan decided to continue his upward
march in interest rates. it was bad. And, then
the stock market bursted in 2000,
businesses in America was tired of the Democrats and high taxes, and
it was conveniently election time, so capital investment slowed and the
States entered into a recession. Housing prices was still
sucky in BC.... but there were some signs since
people made oodles of stock market money in 2000 and plowed some of their
money back into real estate.... so we go to 2001, Greenspan decided to lower
interest rates to stimulate the economy.... and guess what did housing
prices start to do in Vancouver? go up.
and, September 11, 2001 was in a way the best
thing that has happened to the world economy. Osama Bin
Laden's strategy to hurt America really
backfired. Worldwide interest rates in every country lowered to levels not
seen since the Nifty Fifties. And, after the successful Afghan and Gulf
war, things just boomed and commodity prices are at 20 year highs... and our
BC economy is rocking... No thanks to the Liberals....
so... what happened in 1998? don't believe what
you read in the Vancouver Sun... there was a neat
pro Real Estate article today...
housing prices in Vancouver dropped really bad in 1998.
it's doubtful that 2006 will see a repeat of 1998...
not sure about 2008 though.
what happened in 1998?
the lower priced homes did not change in price
much. there will always be high demand for the
affordable homes and presumably they saw a correction in price throughout
Greater Vancouver.
what happened in West Side Vancouver?
hmm... mortgage interest rates of 9%... ouch...
BC stagnant economy so incomes were not rising. ouch.
the homes costing $800,000 or more dropped big
time in price... from $800,000 to about $650,000.
that's about a 23% drop. the luxury homes that were built spec for
the open market were priced at say $3 million... they sat on the market for
months and they ended up selling for say $2 million.
in richmond... a
$880,000 brand new house could not sell... prices dropped to asking about
$620,000. that's a 41% drop.... Richmond has to
thank the emigration that was leaving Richmond to go back to Hong Kong for
that.
and condos? contrary
to what the senior CMCH market analyst... sigh... the CMHC are mortgage
insurers whose purpose is to get more loans insured... they made $2 billion
in profit in 2003... so they have a vested
interest to see housing prices stay the same....
condos generally tank in price the most when there is a downturn... they are
the most volatile.
i have friends who
went through that crisis...
one girl bought a condo in richmond in 1996 for
$220,000. her 3 year term mortgage was up for
renewal in 1999. she had a high ratio 10% down
mortgage. in 1999, her condo dropped in price to
an assessed market value of $160,000. or
37.5%... she needed to inject equity into her condo.
her parents had to bail her out.
one couple bought a 2 bedroom condo in downtown
Vancouver in 1994... for $240,000.
they listed their condo in the market in 1998...
and there were very little offers... they were
engaged and wanted to move up to a house. they
ended up selling their condo for about $180,000 in 1999.
that's a drop of 44%.
so does the past price moves help you in maybe
predicting the market in say 2006, 2007 and 2008?
it's hard to forecast economics. it
won't be easy because the variables are so hard to predict.
china, demographics, commodities, deficits,
interest rates... just too many.
but I doubt it would
be bad as 1998.
globalization did one thing... it made the world
more efficient. companies merged and acquired
other companies so the levers of industry are concentrated in a few large
players. they control the supply of commodities
better, but there is still competition but just not as much as before in the
past. what we will see is presumably that commodity prices will remain
fairly high... it's well known that it takes roughly 2 years lag to reopen a
mine or start up a new mine. we have the supply,
except for electricity and oil but for most commodities, it is not hard to
ramp up supply. barring a war or some similar
catastrophe in asia, it's unlikely commodity
prices would retreat much to what we saw in 1998 to 2002.
and Canadian interest rates would lag that of the
States... which means it won't go up as fast. 40% of Canada's GDP is
resource based.
here in Vancouver, it's hard to quantify the
amount of correction but interest rates are definitely on the rise. Canada
can't really maintain that large of gap between the US rate... we are at
0.50 percent... i think the pundits are wrong...
they say interest rates won't rise until the fall... i
think after one more rate increase by the US Feds, the most they would allow
is 0.75%... and Cdn rates will follow.
in downtown Vancouver, the situation is so precarious and some exorbitantly
high that it would be wise for someone who bought a $220,000 Concord
Pacific 2 bedroom condo in 1996 to sell it for $670,000 and buy a house in
East Van, North Van or somewhere.
the black nightmare scenario is around 2013.
if BC doesn't find another industry or
industries to replace forestry, our economy will be in shambles. 80% of the
pine trees in the Interior will be lost to the mountain pine beetle.
we we will see a
decade of ravenous Interior forest fires. and a
1/4 of BC's GDP is forestry based. the nightmare
scenario is around 2012/2013. housing prices
here in Vancouver really don't look good any more.
that's why I support offshore gas drilling. we
need to find something to replace forestry.
some short post... this is way too long.
i think
i need to retire from this forum.
i found out about
this forum on Sunday but it's getting really tiring typing these long
messages.
hope the above analysis helps.
it's quite pessimistic in a way.
the Olympics is not that big a deal... The
infrastructure budget is how many billions? maybe
$10 billion... 20 tops... from 2006 to 2010... that's
$20 billion / ($156 billion X 5) = 2.5% / 5 years = 0.5% more to the GDP per
year. a 1% increase in interest rates would have
a greater effect on the BC economy than several Olympics. The
increaed net migration of people to BC would
have a greater effect on the economy than the Olympics.
The Olympics is just a symbol/a showcase. it's not the same as investing
and creating say a high tech, semiconductor industry here in BC.... once the
show is over... the more positive effect would be tourism... but Vancouver's
was already well known worldwide as a tourist destination. The Olympics
won't add materially more to that reputation in future years.
|
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