Time Magazine cover from June 13, 2005.
Time Magazine cover from September 6, 2010.
Monday, August 30, 2010
What a Difference 5 Years Can Make
Time Magazine cover stories are marvelous contrary indicators.
Time Magazine cover from June 13, 2005.
Time Magazine cover from June 13, 2005.
Wednesday, August 25, 2010
Teranet House Price Index - June 2010
AUGUST 2010 | ||||||||||||||||||||||||||||||||||
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Since the resale market has been slackening across Canada - from April to July of this year, more existing homes came on the market than were sold - it is too early to conclude that the relatively vigorous prices rises of April, May and June launched a trend. The prospect of harmonized sales taxes coming into effect July 1 in Ontario and B.C. may have stimulated sales in Vancouver, Toronto and Ottawa in the preceding months. 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. |
Thursday, August 19, 2010
Intrade Bets on Vancouver Housing
The poster Austin over at Realestatetalks has taken the initiative to set up an Intrade bet on the Teranet Vancouver HPI. Here are the two contracts:
And another:
Teranet's report from May 2010 Vancouver index = 155.23.
A value of 143 on December 2010 would equate to an average 1.17% monthly drop for the remainder of the year or a 7.9% drop from May 2010.
A value of 121 on December 2013 would equate to an average 0.58% monthly drop or a 22.1% drop from May 2010.
The June 2010 report will be out in about a week's time.
https://www.intrade.com/jsp/intrade/common/c_cd.jsp?conDetailID=734327&z=1282235580558
This market is based on the monthly Teranet National Bank National Composite House Price Index for Vancouver (from the map on the main page click on the Vancouver pin to see the latest Vancouver index value).
The contract will settle (expire) at 100 ($10.00) if the monthly Index for Vancouver is 121 or less before the end of 2013.
The contract will settle (expire) at 0 ($0.00) if the monthly Index for Vancouver is not 121 or less before the end of 2013.
The index for each month, up to and including December 2013, will be reviewed when published. If the monthly index is 121 or less the contract will be expired at 100. If not the contract will be expired at 0 once the index for December 2013 is published.
And another:
https://www.intrade.com/jsp/intrade/common/c_cd.jsp?conDetailID=734326These bets can behave weird if volumes are low. However if Vancouver residents and outsiders are in a betting mood, this trade could really take off. Place your bets (if you dare!) and good luck. I'll do a bit of analysis of the potential directions and values of the Teranet HPI, in the next 4 months and the next 2 years, in some upcoming posts.
This market is based on the monthly Teranet National Bank National Composite House Price Index for Vancouver (from the map on the main page click on the Vancouver pin to see the latest Vancouver index value).The contract will settle (expire) at 100 ($10.00) if the monthly Index for Vancouver is 143 or less before the end of 2010.
The contract will settle (expire) at 0 ($0.00) if the monthly Index for Vancouver is not 143 or less before the end of 2010.
The index for each month, up to and including December 2010, will be reviewed when published. If the monthly index is 143 or less the contract will be expired at 100. If not the contract will be expired at 0 once the index for December 2010 is published.
Teranet's report from May 2010 Vancouver index = 155.23.
A value of 143 on December 2010 would equate to an average 1.17% monthly drop for the remainder of the year or a 7.9% drop from May 2010.
A value of 121 on December 2013 would equate to an average 0.58% monthly drop or a 22.1% drop from May 2010.
The June 2010 report will be out in about a week's time.
Sunday, August 15, 2010
The Chinese Property Bubble
It seems, according to news sources, mainland Chinese buyers are sweeping in to grab property around the world. But nor are other areas around the world oblivious to this recent development:
1) Hong Kong: Hong Kong housing bubble! Mainland buyers blamed
2) Australia: Chinese whispers: they're driving up housing prices
3) Vancouver: Mainland Chinese buyers driving up luxury home prices
4) Los Angles: China’s new rich set trend buying luxury homes in California with cash
5)Korea: Rich Chinese buy villa in S. Korea resort to spend weekend
6)U.S.: China property buyers go global as yuan rises
7) Singapore: Chinese developers eye S'pore property
8) Japan: Japan luring Chinese property shoppers
Hat tip to unicas on Realestatetalks
1) Hong Kong: Hong Kong housing bubble! Mainland buyers blamed
2) Australia: Chinese whispers: they're driving up housing prices
3) Vancouver: Mainland Chinese buyers driving up luxury home prices
4) Los Angles: China’s new rich set trend buying luxury homes in California with cash
5)Korea: Rich Chinese buy villa in S. Korea resort to spend weekend
6)U.S.: China property buyers go global as yuan rises
7) Singapore: Chinese developers eye S'pore property
8) Japan: Japan luring Chinese property shoppers
Hat tip to unicas on Realestatetalks
Monday, August 09, 2010
Low Rental Yields
If you think Vancouver has low yields, check out other figures from parts of Asia, courtesy Global Property Guide:
Taiwan: Price Yields 2.84%
Hong Kong: Price Yields 3%
China: Price Yields 3%
India: Price Yields 3-4%
Those are some mighty poor cash returns, if I might say so. Certainly GPG holds back no punches calling bubbles in all the above countries and territories. Remember these are yields before expenses. In Taiwan, it is likely newly-minted landlords are making a 0% cap rate.
But before we pass off these countries as simply being in a giant asset price bubble fueled by low interest rates, it's worth asking why their yields are so much lower than in North America's. Certainly avid speculation and a lack of perceived viable investment alternatives may play a role. There is one fundamental statistic, however, that can justify lower yields: high rental and income growth rates. While inflation is high in these countries, incomes are continually outpacing inflation by a healthy margin as they play catch-up to the developed world. (Albeit Hong Kong is pretty darn first world!) This in turn increases the present value of future cash flows and justifies a lower present-day yield. This is a similar concept why single family dwellings in areas experiencing density increases have low yields: their future cash flows due to re-development will outpace expected rental growth of the current structure.
Rents in Hong Kong increased over 6% last year; in addition, it is estimated 90% of mortgage loans are variable rate, with the variable rate currently around 2% or so. But it is worth noting rental yields have been low for a long time, what Global Property Guide analysts attribute to the wealthy using property as a method of diversification. Though if rents are increasing at a healthy pace, there may be more to it than diversification. In addition, while the "wealthy" certainly have the luxury of throwing a few % of their net worths into real estate, the majority are blithely going along for the ride with a significant and relatively undiversified portion of their net worths.
It helps to look at these Asian countries' property markets since a large number of buyers and sellers in the Vancouver area originate from these countries. It gives us some perspective of the attitudes and comparables these buyers are using when determining the value of North American (and specifically Vancouver) real estate. That said, I have some concern that the economics that, in part, can reasonably justify lower rental yields in certain countries are being improperly applied to North America, where wage growth is limited close to inflation.
Taiwan: Price Yields 2.84%
Hong Kong: Price Yields 3%
China: Price Yields 3%
India: Price Yields 3-4%
Those are some mighty poor cash returns, if I might say so. Certainly GPG holds back no punches calling bubbles in all the above countries and territories. Remember these are yields before expenses. In Taiwan, it is likely newly-minted landlords are making a 0% cap rate.
But before we pass off these countries as simply being in a giant asset price bubble fueled by low interest rates, it's worth asking why their yields are so much lower than in North America's. Certainly avid speculation and a lack of perceived viable investment alternatives may play a role. There is one fundamental statistic, however, that can justify lower yields: high rental and income growth rates. While inflation is high in these countries, incomes are continually outpacing inflation by a healthy margin as they play catch-up to the developed world. (Albeit Hong Kong is pretty darn first world!) This in turn increases the present value of future cash flows and justifies a lower present-day yield. This is a similar concept why single family dwellings in areas experiencing density increases have low yields: their future cash flows due to re-development will outpace expected rental growth of the current structure.
Rents in Hong Kong increased over 6% last year; in addition, it is estimated 90% of mortgage loans are variable rate, with the variable rate currently around 2% or so. But it is worth noting rental yields have been low for a long time, what Global Property Guide analysts attribute to the wealthy using property as a method of diversification. Though if rents are increasing at a healthy pace, there may be more to it than diversification. In addition, while the "wealthy" certainly have the luxury of throwing a few % of their net worths into real estate, the majority are blithely going along for the ride with a significant and relatively undiversified portion of their net worths.
It helps to look at these Asian countries' property markets since a large number of buyers and sellers in the Vancouver area originate from these countries. It gives us some perspective of the attitudes and comparables these buyers are using when determining the value of North American (and specifically Vancouver) real estate. That said, I have some concern that the economics that, in part, can reasonably justify lower rental yields in certain countries are being improperly applied to North America, where wage growth is limited close to inflation.
Wednesday, August 04, 2010
July Stats Packages
I am on vacation and not wanting to spend my precious free time updating charts so it'll just have to wait. In the meantime here are links to the REBGV and FVREB statistics packages for July 2010.
At first glance it appears that Months of Inventory is getting quite high and price drops are occurring.
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