Sunday, February 03, 2008

Robert Shiller Video

This video was posted over at Calculated Risk and I figured I would add it for your viewing pleasure here.

10 comments:

misanthropic curmudgeon said...

good article!
i noticed he hit on the "consumer confidence" level as being very important.....

if you feel rich well party on! but if you feel poor and scared you ain't gonna be out shopping....

for a new pickup truck or a new townhome....

Paul said...

Didn't Shiller call Vancouver the bubbliest city in the world?

Coton said...

I just wonder how long Canada can hold out. Victoria, Vancouver and Toronto for that matter. We are so much more connected to the US than people want to believe.

I think this whole idea that sub prime loans don't exist here is garbage. How come all these young couples are buying $1 million plus properties in Toronto and I am sure it is the same in Vancouver. When we were looking to upgrade the bank was willing to lend us ooodles and ooodles of money. We are credit worthy but our salaries are not that huge. Luckily my husband is pragmatic or we could have been sitting in a big house with tons of debt.

Anyway, when will it hit Canada. I keep watching.

Newcomer said...

Actually, Paul, he only said, "in North America," so we should be OK.

Paul said...

Here is the link-

Bubbliest city in the world

http://www.theglobeandmail.com/servlet/ArticleNews/TPStory/LAC/20050426/RTIP26-1/TPBusiness/?query=shiller

patriotz said...

How come all these young couples are buying $1 million plus properties in Toronto and I am sure it is the same in Vancouver.

Are they? Here's what 330K gets you in a trendy Toronto neighbourhood.

Note rent of $2118/month. That's a price/rent of 156, a bit on the high side, but not even in the same league as Vancouver.

That's cash flow positive, including taxes, with 10% down, 5.5% 30 year mortgage.

I am completely mystified as to why anyone would buy a high-priced condo in Toronto when they can buy a property with land for less.

jesse said...

patriotz, to be fair the neighborhood there is actually not the best (south and west are much nicer) and that particular property borders on a commercial alley and is on a reasonably major street. Also the lot size is half of a Vancouver standard lot so it's hard to do a direct comparison. Acceptable lot size is one reason why directly comparing Toronto to Vancouver can lead to erroneous results.

It's interesting to note that in Toronto row housing and non-strata duplexes are much more common and almost absent in Vancouver area. I heard rumours that Vancouver city planning had some weird (read: illogical) reason for disallowing row housing (i.e. semi-detached without strata) but for many it would be a wonderful option.

jesse said...

Shiller tiptoed around stagflation and was quite complimentary towards Bernanke's knowledge of the Great Depression. He was careful with his words and by this he implied a lot more than he said.

I don't know if he's a self-proclaimed optimist for real or if it's a tactic to defuse his detractors.

patriotz said...

patriotz, to be fair the neighborhood there is actually not the best... etc

BFD. Your arguments are non-quantitative. What matters is that the property valuation is supported by rents. Try finding something like that anywhere in Vancouver.

jesse said...

"Your arguments are non-quantitative."

You said the neighborhood was "trendy". Having been to that exact block I am saying othwerwise. Yields are better but the location is not that good and other properties close to there are priced higher.

"What matters is that the property valuation is supported by rents. Try finding something like that anywhere in Vancouver"

Point taken though, as has been debated here lately, future densification potential can lead to decreased yields. OTOH Vancouver condo prices are high relative to rents and this filters through to SFH prices bubbling up.