AUGUST 2009 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| ||||||||||||||||||||||||||||||||||||||||||||||||||
Of the six constituent metropolitan-area indices, four showed monthly rises in June - Montreal (1.2%), Toronto (2.3%), Ottawa (2.1%) and Vancouver (1.6%). For Vancouver it was a first monthly rise after 11 consecutive declines. For Montreal it was a fourth straight monthly increase. In both Halifax and Calgary, June prices were down 0.2% from the month before. For Calgary it was the 12th consecutive monthly decline and the 19th in 22 months. Four of the six city indices were down from a year earlier - Vancouver (−10.7%), Calgary (−12.5%), Toronto (−5.6%) and Halifax (−0.4%). Montreal, up 2.4% from June 2008, is the only market that has yet to show a 12-month decline. Ottawa has shown a 12-month decline only once, in May of this year. The composite index is down 6.8% from the peak of August 2008. Toronto prices are now down 7.5% from their peak of the same month. Calgary is 15.4% below its peak of August 2007. Halifax and Ottawa show smaller declines from peak, 0.6% from November and 2.2% from October respectively. Teranet – National Bank House Price Index™
The historical data of the Teranet – National Bank House Price Index™ is available at www.housepriceindex.ca.
The Teranet–National Bank House Price Index™ is estimated by tracking observed or registered home prices over time using data collected from public land registries. All dwellings that have been sold at least twice are considered in the calculation of the index. This is known as the repeat sales method; a complete description of the method is given at www.housepriceindex.ca
Teranet - National Bank House Price Index™ thanks the author for their special collaboration on this report. 1 Value of Dwelling for the Owner-occupied Non-farm, Non-reserve Private Dwellings of Canada. | ||||||||||||||||||||||||||||||||||||||||||||||||||
 | ||||||||||||||||||||||||||||||||||||||||||||||||||
Disclaimer The Index Data is for informational purposes only, and the user of the information contained in the Index Data assumes the entire risk of any use made of the Index Data. You understand and agree that the Index Data is provided "as is" and neither National Bank of Canada (“NBC”) nor Teranet Inc. (“Teranet”, and together with NBC, the “Index Data Providers”) warrants the accuracy, completeness, non-infringement, originality, timeliness or any other characteristic of the Index Data. The Index Data is not an offer or recommendation to buy or sell or a solicitation of an offer to buy or sell any security or instrument or to participate in any particular trading strategy. Further, none of the Index Data is intended to constitute investment advice or a recommendation to make (or refrain from making) any kind of investment decision and may not be relied on as such. Reproduction, redistribution or any other form of copying or transmission of the Index Data without the Index Data Providers’ prior written consent is strictly prohibited. Without limiting the generality of the foregoing, the Index Data and other Index Data Provider intellectual property may not be used as a basis for any financial instruments or products (including, without limitation, passively managed funds and index-linked derivative securities), or used to verify or correct data in any other compilation of data or index, or used to create any other data or index (custom or otherwise), without the Index Data Providers’ prior written permission. In no event shall any of NBC, Teranet, their respective affiliates, any of their or their direct or indirect information providers nor any other third party involved in, or related to, compiling, computing or creating any of the Index Information (collectively, the "Index Data Provider Parties") have any liability to any person or entity for any damages, whether direct, indirect, special, incidental, punitive, consequential (including, without limitation, loss of use, lost profits or revenues or any other economic loss) arising in any manner out of your use or inability to use any of the Index Data contained in this monthly report, even if such party might have anticipated, or was advised or notified of, the possibility of such damages. The Teranet - National Bank House Price Index™ is an independently developed representation of the rate of change of Canadian single-family home prices. The measurements are based on the property records of public land registries. The monthly indices cover six Canadian metropolitan areas: Calgary, Halifax, Montreal, Ottawa, Toronto and Vancouver. The metropolitan areas are combined to form a Canadian composite index. In addition to their informational role, the Teranet - National Bank House Price Index™ was developed to be trustworthy benchmark for financial professionals. Teranet and NBC offer licenses covering all index-linked products. Teranet offers e-services to the legal, real estate, government, financial and healthcare markets. Combining our focus on customer needs with technical sophistication and operational simplicity, our comprehensive products and services include property information, transaction management, collateral risk management, geospatial information, workflow software and enterprise solutions. NBC is an integrated group which provides comprehensive financial services to consumers, small and medium-sized enterprises and large corporations in its core market, while offering specialized services to its customers elsewhere in the world. Asset management is an important component of the NBC's activities. In fact, NBC is a wealth management leader in Quebec. NBC's main priority is to satisfy the needs of its customers and build a long-term relationship of trust by offering personalized services and specialized savings, investment, financing and payment products through a vast network of branches and various electronic channels. It also offers corporate and investment banking services. NBC is an active player on international capital markets and, through its subsidiaries and other entities, is involved in securities brokerage, insurance and wealth management, as well as mutual fund and retirement plan management. Striving to be a good corporate citizen is another of NBC's priorities. In 2007, NBC and its subsidiaries, through corporate donations, sponsorships, in-branch fundraising activities and various benefit events, gave more than $20 million to hundreds of Canadian organizations working in health care, education, community outreach and arts and culture. National Bank Financial Inc. is an indirect wholly owned subsidiary of NBC. NBC is a public company listed on Canadian stock exchanges. |
Friday, August 28, 2009
Teranet House Price Index for June 2009
Subscribe to:
Post Comments (Atom)
48 comments:
I was looking over some charts today and I came up with my conclusions and I wanted to get some feedback from others on this board. The vast majority of this forum is bearish or real estate, maybe for good reason but being somewhat neutral on real estate I thought these charts that I interpret as bullish could maybe be seen by a bear in a different light because in my opinion these charts make it seems that Vancouver real estate is likely forming a bottom, and while prices probably won't go up substantially in the near term, 10 years from now, prices should be much higher. These charts also show that there isn't much downside risk either.
http://cuer.sauder.ubc.ca/cma/data/ResidentialRealEstate/HousingPrices/housing-pri-pctgrowth-vancouver.pdf
First chart shows nominal house price change year over year and this chart actually suggests real estate in Vancouver is UNDERVALUED. If you overlay a chart of real estate prices to this chart you'll see the only time there was great downside risk was when we were over the 8.28% annual growth rate and you can clearly see how ridiculous it got before the 1980's crash.. this chart suggests a bottoming process.
http://cuer.sauder.ubc.ca/cma/data/ResidentialRealEstate/HousingPrices/housing-real-pctgrowth-vancouver.pdf
Same chart as above but inflation adjusted.
http://cuer.sauder.ubc.ca/cma/data/ResidentialRealEstate/HousingPrices/housing-pri-vancouver.pdf
This one is quite interesting as well, simple chart of Vancouver real estate prices. Being an equity analyst I always look at charts and try to take out the noise and let the market do the talking and this chart shows it's mighty hard being a real estate bear. This chart tells me that the only very dangerous time to buy real estate is when it's making consecutive all time highs. It's an okay time to buy after a YoY decline but the best time to buy it seems is a YoY increase after a YoY decline or an increase as long as it's not making consecutive all time highs.
All this analysis is done simply based on price, I have not gone into any hypothetical or anecdotal evidence, I'm simply looking at the price charts which is ultimately the final arbiter. Believe me, being in the stock market I have seen markets act so incredibly irrationally that it humbles me to the core, that's why I try to not fight the price if it's telling me I'm wrong and I really think the price is telling the bears they are wrong here and trust me I can understand why people are bearish on real estate in Vancouver, many of you make incredibly compelling points and I respect all the evidence brought forth but unless these charts are just dead wrong in their data input then my conclusion is real estate is not going to collapse, it may dip 5 even 10% over the course of a year or two but I think that's the worst case scenario, a bottom is building and I believe 5-10 years from now prices will be MUCH higher than they are today.
Sorry for the long post....
Thoughts?
chadmpnp, I dunno. One can go to other parts of the country or to the US and receive a far better income return on investment than Vancouver, unless one extrapolates capital gains into the future. I'm not big on technical analysis making investment decisions. If you insist on TA being a good method of investing, try adding some colourful MA plots and some trend arrows. Best of luck with all that.
Financing has become dirt cheap for housing; when other investments crowd out available capital it is unlikely mortgage rates will remain low. The Sauder data showing "long term" price growth is for a time when financing rates have undergone a secular trend downwards. Unlikely that trend is to continue though I am surprised at how low rates have become recently.
I'm not talking about hoccus poccus TA like stochastics, fibonacci's etc etc... I'm purely looking at price action and the price action is saying we're in a bottoming PROCESS.. prices seemed to be VERY overvalued in the 80's as shown in the first chart I posted and it could be a valid argument that prices came down sharply thereafter because of interest rate increases but the bottom line is that chart shows we were already very overvalued and just needed an excuse or a catalyst to head lower into normal valuation. The same chart clearly shows we are not overvalued, we are in fact undervalued. Will rising interest rates be a negative for real estate? Sure it will, but given the facts that we have at hand today it doesn't look like the market is trying to find an opportunity to head lower so if anything rising interest rates will keep prices at around the same level they are today or possibly just slow the pace of increase but like I said before I'm very confident that if we talk 5-10 years from now prices will be much higher.
The "Precentage Growth" graphs are misleading becuase they show the *rate* of change and not the *outcome* of that change. These graphs are like watching the speedometer on a car to try to determine how far you've gone. Looking at the odometer is far more effective.
The odometer in this case is the "real house price" line on the "Vancouver House Prices" graph. That line shows that we are still at a historical price high. In fact the peak in '81 (or thereabouts) topped out at 550 and we haven't even fallen below 650 yet. Unless one expects house prices, a core cost of living, to keep rising far faster than inflation, we have to expect real prices to drop much further.
I really don't understand the above post at all. Basically what you're saying is that over time you don't expect real estate to go higher and even the most rabid bear would think that is foolish.
Don't take this the wrong way Hej but I think out of every argument I've heard on this site as to why real estate prices should go down, yours is by far the least rational.
I really think the price is telling the bears they are wrong...
I think you're analysis is likely correct for the current interest rate level. However a small change to interest rates should have a large effect on all the other numbers including the possibility of a severe snap back. The speed at which this plays out really depends on how many people have a variable rate and how soon and how fast interest rates go up. If interest rates stay low for years then this likely could be the bottom.
I still haven't got my head wrapped around how interest rates factor in to all this. The Median House/Median Income number can definitely go higher when interest rates are lower. For me I think long term and prevailing interest rates matter less than the size of the loan but it seems for many people think the opposite. We have however been gradually lowering interest rates for a long time and this is what people are used to and assuming ignoring the fact that they can't go any lower and can go a lot higher.
"If interest rates stay low for years then this likely could be the bottom."
Why do you say this? Japan has had interest rates low for over 15 years and it didn't save property prices. Low interest rates is a sign of weakness in wage growth and investment, neither of which are positive for future incomes of homeowners, whether investors or owner-occupiers.
chadmpnp, there's nothing irrational about expecting house prices to track inflation. There's no free lunches, unless you're using something to be productive you shouldn't expect to get rich.
I think the problem with looking at the price change charts is that a very high peak like in '80-'81 can be equivalent to a long slightly elevated period, like '01-'08. It's the area under the data that counts and that isn't totally intuitive.
All the responses are appreciated, thanks to everyone for presenting their points of view, often when there are opposing points of view on msg boards it turns into a flame war.
My viewpoint is this: While bears certainly make good points and the analysis is well thought out, none of the bear arguments can point to facts, numbers, charts or any hard evidence that points to lower prices. I've learned over the years that opinions are opinions, and hard #'s or facts are telling the real story, as irrational as they may seem. I'm sure there are some bears here with charts or some sort of real evidence as to why prices are going down, that would definitely spark a debate which is more apples vs. apples.
"none of the bear arguments can point to facts, numbers, charts or any hard evidence that points to lower prices"
Have you read the hundreds of previous posts on this blog? Unsustainable low interest rates, oversupply, low local incomes, government cutbacks, dependency of employment on construction, falling employment, and low cap rates for fully densified housing -- all are pointing to lower prices.
I don't know what you mean by "facts" but if you mean that prices aren't as low as bears' target prices then yes bearish arguments are absent of "facts".
Jesse,
All your points are fine, but your ASSUMING all these factors will lead to lower prices. Until I see a chart or some sort of historical representation that clearly shows that these factors have lead to lower prices every time they occurred in the past then all your points are ASSUMPTIONS that they lead to lower prices.
What I have shown with the charts I posted originally are what the facts are now and pointing to times in the past when the factors have been the same and what prices did 5-10 years later when the same factors were presented in the past point to a stabilization in prices (we could fluctuate up or down 5-10%) leading to significantly higher prices in the future... I'm presenting facts here based on the closest factors fitting the past, past results are not always indicative of future results, but it's better than any other analysis tool besides a crystal ball.
Let me again make myself clear here. Over the next 5 years I do not know what will happen, however I think an outright collapse (in excess of 15-20%) is completely out of the question, and as stated many times I strongly believe in 10 years prices will be SUBSTANTIALLY higher than they are today.
"First chart shows nominal house price change year over year and this chart actually suggests real estate in Vancouver is UNDERVALUED. If you overlay a chart of real estate prices to this chart you'll see the only time there was great downside risk was when we were over the 8.28% annual growth rate and you can clearly see how ridiculous it got before the 1980's crash.. this chart suggests a bottoming process."
I don't understand your interpretation of the data.Based on the first chart you concluded that real estate in Vancouver is undervalued. Can you elaborate? Only because the line is now below zero you concluded that we reach the bottom ? And is it the bottom because the other bottoms were between -15% to -20% ? Really? That's all you got? The only FACT I see in that chart is that the historic average is 8.28%. I can't draw any conclusions about what will happen in the next years from this chart. You may be right: this is the bottom. I still don't see the relevance of this: for the next years the yoy can be between -15% and 0% ( so the bottom you called out will hold ) but the prices will go down. Your interpretation of the first chart is bullish but even if you are 100% right the prices can continue to go down.And we the bears have no logic, no facts or numbers to support our claims.
"If interest rates stay low for years then this likely could be the bottom."
Why do you say this? Japan has had interest rates low for over 15 years and it didn't save property prices. Low interest rates is a sign of weakness in wage growth and investment, neither of which are positive for future incomes of homeowners, whether investors or owner-occupiers.
I'm basing this on the strength and length of the current rebound brought on by low interest rates and talking to a coworker buying a downtown condo. Basically he says rent and owning right now is a $200 dollar a month differential at these interest rates. ( I confirmed this.) He got a 5 year loan and he'll probably be able to make it work if interest rates stay low. This is a first time buyer and this injects money into the move up buyers and so on. Job market is already theoretically in the dumps, stock market has tanked so what other substantial change is going to have to happen to affect prices?
As a disclosure though. I'm a bear. I can't and won't pay these prices and I won't drive from timbuktu just to afford a property. Renting doesn't seem so bad these days. Perhaps I have capitulated and perhaps that's a good thing as it might be a sign things are about to turn around :-).
ciprian, again you present ZERO facts..
To elaborate on my interpretation, look at subsequent real and inflation adjusted price movements in http://cuer.sauder.ubc.ca/cma/data/ResidentialRealEstate/HousingPrices/housing-pri-vancouver.pdf after every time YoY growth dips below -15%... Please argue this, I'll be interested to hear what you have to say.
In 1982 we dipped below -15%.. what did prices do? 10 years later.. 66% higher
1991 we dipped below -15%.. what did prices do? 10 years later.. 10 years later 33% higher
We are in very similar price action conditions now... there probably hasn't been a better time to buy in Vancouver in the past 20 years... Yes... that's all I got... FACTS...enjoy getting priced out of the market.
"What I have shown with the charts I posted originally are..."
I know what you have shown. You are applying technical analysis and relying on past trends to predict future results. Nothing wrong with that but that's not how I determine how to invest.
"I strongly believe in 10 years prices will be SUBSTANTIALLY higher than they are today."
Well you have every right to believe. I disagree. Wages simply cannot support affordability being much worse though certain detached properties will appreciate faster than condos. The only way I see out of the current situation is a substantially higher median wage but I can't see much to support that thesis.
I indeed presented ZERO facts in my post. I intended to obtain clarifications from you about your interpretation of the charts and not to present facts.
"In 1982 we dipped below -15%.. what did prices do? 10 years later.. 66% higher
1991 we dipped below -15%.. what did prices do? 10 years later.. 10 years later 33% higher"
these numbers are 100% correct. Can I use them to present a FACT? 66% increase first time ( 1982 ) 33% increase second time ( 1991 ) so what will be the increase the third time we dip below -15%? Obviously the answer is 0% increase. (what's the next number in this series 66,33 ? It can be 0 )
another FACT: the house price in 1981 was 540,000, in 2009 is 660,000 ( according to one of your charts). In 28 years the house price increased by 22%.Correct? Like you said "Please argue this".
So in another 28 years the house prices in Vancouver will increase only by 22%.
The problem with the above interpretation of the data and also with your interpretation is that we both handpicked the numbers. You handpicked the number of years after you checked for a price increase ( 10 ) and you only used 2 cases to study ( 1982 and 1991 ) and I picked the abnormal price from 1982.
The charts are FACTS, your interpretations of them are not.
Ciprian, you want housing prices to be the same in 2009 as they were in 1981? Good luck with that. My interpretations are FACTS. Show me a collapse that has EVER happened when the conditions we are in now have been in place. Do I care where housing prices go in the next few years? Not really, unless there was a collapse of 15-20% coming, then I would definitely not be buying, but if it's blatantly obvious that in 10 years prices will be higher while the downside risk is low, I'll take that. When the charts I showed present the fact that there hasn't been a better time to buy in Vancouver since 1991, I see that has bullish. Suggesting that because in 1981 we rebounded 66% and in 1991 we rebounded by 33% and now we should rebound 0% is honestly one of the most ridiculous things I have ever heard. We were more oversold in 1981 than 1991, therefore the bounce was much bigger. We're about as oversold as we were in 1991 present day so I expect another similar situation to 1991.
I can't see how anyone can argue the numbers and see a collapse, maybe fluctuations up or down in the next few years, but I don't daytrade real estate, I think it's very obvious that if you're buying a house in Vancouver now and are not looking to flip the house, in 10 years, you will be very happy with your investment.
chadmpnp, here is a chart from edmontonhousingbust.blogspot.com:
http://dynamic-evolution.com/ehb/090304-2.jpg
Here are some facts about this chart:
-From 1962 to 2002 real house prices in Edmonton went from (roughly) $100,000 to $150,000
-This is a real return of 1.045% per year
-Prices diverged from this trend once before and took 15 years to return to it
-They diverged again in 2002. In order to return to them again by 2017 (15 years) real house prices would need to be $175,000 (about a 50% drop from the peak)
Cherry picked numbers aside, real house prices should stay constant, here is another chart illustrating this point:
http://www.markt-daten.de/blog/wordpress/wp-content/images/2009/02/20090224-herengracht.gif
The only way nominal house prices are going up is through inflation. I think this is what Jesse is getting at by discussing wages increasing. Real house prices are going to go down. I won't call that a fact but I'm quite certain it is correct.
Vibe and Jesse, I'm not going to argue against real home prices going down, I won't argue for it either, however I'm talking nominal prices. If the reason for home prices going up is inflation (which has been my thesis for a while) then so be it, I just strongly believe 10 years from now nominal prices will be higher, inflation adjusted, I'm not sure but I'm interested in nominal #'s because regardless of why prices are higher in 10 years, the bottom line is they will be higher, inflation being the catalyst or otherwise. The 2nd chart is an interesting representation of the amazing power of inflation but I can't see how an argument can be made for the under or overvaluation of a market. Both charts to me represent more of a call on inflation than on real estate prices. Again, I love the discussion, but absolutely nothing I have seen visually so far suggests any facts that show the bottom falling out or any proof that in 10 years real estate won't be higher in NOMINAL terms.
Let's say nominal home prices go up 5% by next year. Now let's say inflation is 10% over this same period. Would you say that buying a house now is a good investment under these circumstances? What about if equities and commodities track inflation?
Vibe, I would say it depends greatly on your situation. If you're a first time home buyer I think it's good time to get in the market because I believe nominal prices will go up. I concur other asset classes will beat inflation by more than real estate so if you're looking at real estate purely as an investment then you could absolutely look elsewhere if you see something more attractive. I think however if you're looking for a house to live in but have been waiting for a couple of years because you wanted to get in at more reasonable prices and avoid a potential steep decline then I think right now is a terrific time for a first time home buyer. For the first time home buyer the purchase of a house is a place to live in but also the biggest investment of their lives most likely. I would very rarely invest in real estate as an investment because I know I can outperform it's nominal and inflation adjusted returns managing my own money. My analysis is not comparing real estate to other investment vehicles, I'm comparing real estate prices over the course of time against itself to try to time an individual asset class.
You're still better off using real dollars since this will tell you what your house is worth in terms of purchasing power. If you bought and sold your house with gold (or oil or corn) instead of dollars this would become apparent.
At the end of the day a first time home buyer will be more wealthy in ten years if they put their down payment in a GIC and rent instead of buying. And the point is that this isn't always the case, so this is not the best time to get into this individual asset class.
Having said all that I still don't see how your first two charts indicate that nominal prices will be going up any time soon. I'd say it would take at least a 20% drop from the peak just to get back to the linear trendline on the nominal price graph.
Meanwhile, back to the current market. According to Agent Will's weekly statistics, August was a positive month. Total Listings stabilized at these lower levels. Sales/New Listing averaged high 70%. I still don't see evidence of a spring bounce.
chadmpnp, I'm posting this because you seemed (at least in your first post) like you genuinely wanted to understand. It's your own decision, though, whether to take the next steps. I truly intend the following to be constructive, but I realize you might not see it that way. If you don't, I'm sorry.
Firstly, you need to gain a solid understanding of what a "Real Dollar" actually is, and why a "Nominal Dollar" increase in house prices is virtually meaningless for determining whether it is a good investment. You can start by reading the wikipedia articles on real dollar and money illusion.
Secondly, you need to take a critical look at your own analysis. Your comments display a number of logical fallacies and cognitive biases. I believe your primary argument is formed from causal oversimplification and hasty generalization: you seem to have drawn a conclusion based on a single rate-of-change graph that covers a scant 35 years and includes no additional factors (such as interest rate, savings rate, level of indebtedness, etc.). Furthermore, you seem to be holding on to your conclusion by anchoring and belief bias. Be critical of all arguments, beliefs, and assumptions--including your own.
Thirdly, you need to reread the helpful responses people have posted, for your benefit, but with a newly-open mind. You declared that "[you didn't] understand [hej!'s] post at all" and then attacked it as "by far the least rational"; I, on the other hand, see several valuable pieces of information within it, so take another look for them. The post by hej! and one by vibe have demonstrated (without being pedantic) their mathematically-deep understanding of the graphs you posted, and all the other responses (by jesse, RentingSucks, ciprian, and vibe) have provided a multitude of additional insights. If you are still having trouble understanding them, ask for clarification without spurning them. Respect the time these authors took out of their days to help you understand.
I have written the above for your sake, not because I get anything out of it. I honestly hope you find it helpful and not offensive.
Chadmpnp,
Interesting Charts. I have no problem with the idea that your first chart may indicate a bottom forming (ie, the rate of pricing decline is stabilizing). Change in pricing is the derivative of price. To get back to price one needs to integrate the curve (or calculate the area of the curve).
It has been a while since my calculus classes, but the next question is picking your periods (start and end) from which to integrate the curve). From the first chart it is clear that yoy price declines can be maintained for several years. Perhaps if we had a longer time series on the charts longer?
This will bring to question the current economic debate V, U, W, L shaped recoveries? If we see an L RE prices could see long declines.
Numbersguy,
I agree, that's why I said we're likely in a bottom process, I'm by no means predicting a parabolic move higher. The two outcomes that can be derived from all quantifiable data I look at, NOT rhetoric, is.
1. There will not have a major decline (market could drop 5-10%)
2. In 10 years real estate prices will be higher than they are today.
Chadmpnp,
"1. There will not have a major decline (market could drop 5-10%)
2. In 10 years real estate prices will be higher than they are today."
I don't follow point 1. If the rate of decline stabilized at its current rate -10.7% from Teranet(your bottoming arguement) but stays there for a sustained period say a similar period of time as seen in the US (say 3 years), then the Vancouver market could fall significantly from current levels.
NumbersGuy,
Simple, correlate the price chart to the rate of change start. Tell me what you see happens whenever the ROC goes below 10 or 15%. Where were prices 5-10 years later?
"1. There will not have a major decline (market could drop 5-10%)
2. In 10 years real estate prices will be higher than they are today."
You've stated this many times in this post's comments. Repeating it will not make it any more or less true. So to rebut:
1. You are using past charts as a means of forecasting the future direction of prices.
2. Nominal prices cannot increase more than wages increase in the long run, especially for condos.
3. Inflation cannot save prices if an asset class is overleveraged. The debt markets will become more expensive way before wages have a chance to inflate.
1. At least I am using the past as a guide to the future, none of you bears are.
2. That's an opinion, post something that shows this is a fact based on when the same conditions have presented itself in the past.
3. Same as above
My opinions are based on the fact that it's reasonable to believe that similar conditions lead to similar results. While not always true, at least I have a historical guide that can be visually represented to my thesis, bears have yet to provide A SINGLE shred of visual evidence like I have. Opinions, rhetoric and well worded conjecture is all the bears have presented so far.
Sigh.
Mattiasa, thanks for trying - your response was very well-worded and easy to understand. Chadmpnp's evidently not interested in any alternate interpretations of how teh past (or the present) may impact the future.
M,
I'm open to any interpretation, if someone could show how in the past these conditions that we're in now has lead to a large drop and NOT higher prices in 10 years, then SHOW IT.
Please remember I never said real estate was a good investment here, I said prices are going up in 10 years. Whether or not renting would make more sense over the next 10 years over buying I don't know, I have no concrete historical information I can look at to determine the likely path of least resistance. What is VERY clear is that prices 10 years from now will be higher.
There is no negotiating with perma-bears, you guys were probably also shorting the S&P at 666 in March.
Good luck guys.
"At least I am using the past as a guide to the future, none of you bears are."
That's not a badge of honour. By your logic the typical house will be 20X income in 2025. And with that I am afraid we must agree to disagree.
Jesse,
I was just about to make a similar post with regards to simply agreeing to disagree. We can debate back and forth, each side has said their piece and maybe we can re-open the debate when new #'s/figures/charts present themselves and we can argue over the new information that eventually will be presented.
Mattiasa tried really hard but he was ignored. So the question becomes how would you discuss anything with Humpty Dumpty?
The words he uses mean exactly what he wants them to mean, nothing more and nothing less.
The better question becomes why have any discussion with him in the first place?
So tell him he is right, after all we are not able to point to data sources from other cities, which disprove his point. They do not relate to Vancouver. Nor are we able to bring in other technical analysis like momentum divergence with price or Fib retracement as that is “hoccus poccus” and Elliot Wave must be completely ignored. Thus, the only T.A. allowed is trend channels. However, trends are subject to Newton’s first law of motion.
Newton's First Law of Motion states that a body at rest will remain at rest unless an outside force acts on it, and a body in motion at a constant velocity will remain in motion in a straight line unless acted upon by an outside force.
Unfortunately we are not able to bring up a discussion about outside forces like the fact that during the entire trend since the 80’s interest rates have fallen putting in lower lows and lower highs in each subsequent economic cycle. This trend has now reached zero so it is ending by alas this is outside of the limited scope of the discussion as is mentioning Newton.
So I must say that given how the discussion has been limited that Mr Humpty Dumpty is right.
Ross,
It's quite an accomplishment that you wrote such a long post without making a single decent point. Congrats Smokey the Bear.
I'm really starting to question the motivation of some of the bears as you get very defensive whenever a bull rears it's head.
"1. At least I am using the past as a guide to the future, none of you bears are."
IMO we've never been in a situation exactly like we are in now. We can point to some similarities, but governments around the world are doing alot of unprecedented stuff. Look at Sweden for instance where they've introduced negative interest rates. First country ever to do it. Or the US who is trying to be the first country to effectively use quantative easing without massive inflation. How will the ripples from these descisions effect us here?
Which gets me thinking about a book some of you may be interested in reading if you haven't already.
It is called "The Black Swan".
http://www.amazon.com/Black-Swan-Impact-Highly-Improbable/dp/1400063515
"IMO we've never been in a situation exactly like we are in now. We can point to some similarities, but governments around the world are doing alot of unprecedented stuff."
You're absolutely right, I'm just in the camp that the best guide to the future is the past. Could it be different this time? It absolutely can, I'm just utilizing the data we have now to get an indication of the future.
I've read the Black Swan, great book.
chadmpnp,
"I'm just utilizing the data we have now to get an indication of the future."
You are not. You are pointing to a chart of questionable value, making an unfounded claim, calling that claim "obvious", and then ignoring any intelligent rebuttals. (See "argument from ignorance".)
"I've read the Black Swan, great book."
I can only assume that you understood that great book about as well as you seem to understand the valuable comments on this page. (To be very clear, I’m saying that I don’t think you understood it, at all.)
"I'm really starting to question the motivation of some of the bears as you get very defensive whenever a bull rears it's head."
chadmpnp, let me put it bluntly: I have no problem with your bullishness, only your ignorance. Sadly, you seem to be either a troll or an example of the Dunning-Kruger effect. And here I was, hoping that your comment would result in an enlightening discussion.
Mattiasa,
Going to post anything to support your thesis or just attack?
The burden of proof is on you bears, I have presented my argument.
Oh and by the way, the chart I'm referring to was originally posted by a bear in this forum and when the bearish thesis was explained the chart seemed to have great value and significance.
I'm sorry if a chart of hard and factual data plotted on a chart doesn't hold any value in fantasy land.
Mattiasa he truly is a Humpty Dumpty. I offered up the fact that he is only using one T.A. tool, that interest rates are important to real estate and that trends usually end due to an outside force. He does not want to expand the discussion into these areas. He only wants to discuss things that support his point of view. Yes, we hit the bottom of a channel and are now rising off of it. Big deal. By the way, Rome fell and so did Humpty Dumpty.
One point about his graph that the rest of us have not discussed is how pathetic the yr/yr growth rate was in the last boom. I mean we had the change of Government, low interest rates, Olympics, zero down – 40 yr mortgages and increased RRSP withdraws for down payments. Why did we not get a 100% increase yr/yr?
Ross,
I'll expand my area of discussion into anything that can be backed up by a simple historical precedent that shows visually whether it is a chart, whether it is numbers, ANYTHING but pure rhetoric and predictions based on ZERO historical evidence that shows that the conditions were are in today will lead to lower prices in the future.
Ross, again your post is pure fluff with zero historical cause and effect evidence.
Listen, if you bears are so confident prices will be lower in 10 years, then care to make things interesting? Put your money where your mouth is. The money can be held in escrow until 2020, if real estate prices are indeed lower than they are today, you win, if not, I win. This isn't for the money, this is simply to see if you guys even believe the garbage you say. If you're not willing to back up what you say with something of value (money or otherwise) then don't bother talking because you clearly don't believe or have confidence in what you are saying.
No more baseless posts from the bears, if you think prices are going to be lower in 10 years, then let's make things interesting.
Chad,
I think it's simple. If we believe our garbage we won't buy real estate.
Great post. I have been studying the home prices for major metros in North America. So, this post really help me a lot in my study. Thanks
Highest CD Rates
Post a Comment