Hi All,
Pretty much everyday someone asks me when prices in the Vancouver real estate market will hit bottom and everyday I say I don’t know.
I say I don’t know, because I don’t have a crystal ball and can’t see the future and as I licensed Realtor I can be liable if people take a hit relying on my predictions.
There are people out there who are saying they KNOW when the prices will hit bottom and they can tell when prices are bottoming as they are hitting bottom. Don’t trust these people!
What happens if prices stabilise and a bottom is called and then prices fall again? Nobody can accurately predict a market bottom and don’t trust those who say they can.
The market bottom can only accurately ascertained with 100% certainty AFTER it has been hit.
In making your decisions about buying or selling real estate and timing your transactions, do your own research. Read widely and speak to a variety of people with different viewpoints. Don’t rely on those who have simple answers that are too easy.
If something is too good to be true, more than likely it isn’t true.
Please leave a comment, I’d love to hear your thoughts!
This property SOLD on May 13th, 2013 for $1,578,000. Contact Mike for all the details: 604-763-3136.
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Please stabilize the camera first
I get motion sickness.
Its that bloody HD cam, it lacks stablisation which my non-HD Flip has.
Is it really that bad?
What are your thoughts on the content of the post?
Great post, Mike.
I’m with you on this.
As a Vancouver realtor, I get asked the same question nearly every day. Have we hit bottom? When are prices going to rise?
My answer is the same as yours. I don’t know.
We can provide our clients with the hard data and the cold facts, but anything beyond that is conjecture. As you say, no one will know if we hit bottom until it is behind us and we are well into an upward swing.
Sebastian
Hi Sebastian!
Great to hear from you bud!
I’ve been going on Real Estate Talks Forum and there are soooo many anonymous commentators are seriously saying they will know when the bottom is occurring….
Scary!
Anyone noticing a lag when you click on the video? I’ve noticed it has taken up to 20 seconds to play.
Please let me know!
Thanks!
Hey Mike,
You’re absolutely right.
I am a Realtor myself, working the Richmond-Ladner-Tsawwassen area, and I face “The Question” every day. As you point out, it’s easy and super-logical to visualise things “after”.
“Oh, the economy was going to fall. Oh, it was an obvious bubble. Oh, the stock market this, the stock market that.” Fact is we don’t know, and nobody knows. The best we can do is go one step at the time, and be honest and admit that an eventual 8-10% correction to the condo you bought at the very peak of the market doesn’t hurt as much as your 40% correction on your RRSP and other stocks.
I challenge the person that “knows for sure” where the bottom of the real estate market is to tell us the winning numbers on the next Super 7. Odds are about the same…
Hi Harris,
LOL!
Good to hear from you!
Its true, these people who are so sure will very rarely put their money where their mouth is.
How are things down where you are?
M
Not bad, lots of activity, for sure.
We see many of days with more sales vs. new listings [I think at least 3 this week - and today's still in the cards].
As always, property priced right, moves. At least for Richmond/Ladner today, moves fast. We see lots of sods after 2-3 days on the market. There are opportunities for the one that knows what he/she is looking for – no question. Going back to your topic: the problem about the future… when the future is “too” clear, the present bargains will have vanished.
Mike, please call me anytime if you have any interests in Richmond-Ladner-Tsawwassen.
I meant “we see lots of SOLDS” not “lots of sods”
Sorry,
H
LOL!
No worries!
Will do. I’m always looking to work with good people anywhere.
At LEAST a year until the bottom, I would say, and probably more. Vancouverites tend to live in a bubble with little awareness of connections to the outside world, but for those who don’t read, there are ENORMOUS deflationary forces out there right now, from the world’s worst ever credit bubble. Central banks will try to co-ordinate to reflate the global economy (transferring wealth from the prudent to the stupid/greedy, i.e. those who overleveraged), but it can take a long, long time for that kind of liquidity to gain traction when trust has gone and uncertainty reigns. Just look at Japan – they went from a can’t-lose, 10x salary, intergenerational mortgage jump-on-board-or-miss-the-boat decade to TWO DECADES of retrenchment and grinding recession. An entire lost generation, kids whose dreams were strangled in the crib by the actions of their greedy, idiotic parents who thought they’d found a path to easy, endless wealth (i.e. a ponzi scheme).
The party in Vancouver has been enormous. The hangover will be horrendous. Hundreds of thousands of people have spent fictitious money on small and unpleasant condos. They have overpaid egregiously. Too bad; caveat emptor, always, and ESPECIALLY during a bubble when everyone is saying you can’t lose.
Hi Dr. Teeth,
Good to hear from you.
Thanks for your comments.
Its quite obvious we disagree.
Having lived in Japan for two years (I guess that refutes the bit about Vancouverites with little awareness of the outside world) and studied its history, culture, and economy I am not too worried about the recession Canada is experiencing or whats happening with the present correction in real estate.
Japan’s economy and society is very different from ours. Immigration into Japan does not occur and population growth has ground to a halt. Japan tends be a country were problems are ignored and papered over until a crisis forces action on Japan’s elites. The Meiji Restoration of 1868 and the “Lost Decade” of the 90′s are perfect examples.
Canada is not like this at all. Canadian political elites tend to make tough decisions quickly to fix perceived problems. Free Trade, Meech Lake (tried, but failed), and eliminating the Deficit in the ’90′s are prime examples.
We high levels of immigration and our birth rate is not as low as Japan’s. The BC economy is still growing. Vancouver’s economy is still doing OK and people are buying real estate. Prices in Vancouver never increased as much as they did in Japan nor did we have price increases for as long. Its just not that bad here.
Unfortunately using Japan as a comparison is not valid.
Have you spent much time in a condo?
Some may be small, but they are very nice. If you have a spare moment, I’d be glad to show you some places that would most certainly change your negative perception.
I can see you have quite a negative view of whats happening, but its just not that bad.
The market is correcting, but we are not seeing catastrophic fluctuations in price.
Whats been happening over the last 4-6 months is case in point. We have seen a serious market correction with prices falling, yet there is no panic huge price drops and panic sales.
If one is to rely on your prediction that things will turn around in 1 year, then we should be fine.
Its just not that bad…
Hey Mike,
Thanks for the video blog. I got 95% on my Economics project! Hopefully Bank of Canada’s news today will generate more market activity…
Hi Cheryl!
Yaaaa!!! Congrats on the great score!
Glad to hear you did well! Thanks for sharing your paper, it was great!
Keep in touch and let me know if you need anything.
Thanks!
M
About the only thing we can be certain is that interest rates have hit rock bottom.
There is nothing holding real estate prices up right now. There is an over supply of properties and an undersupply of people making wages that can afford said property.
With all the government spending, interest rates will have to rise in the upcoming year in order to counteract inflation (or hyperinflation which i believe is a definite possibility).
So.. can that townhouse come down another 100k.. sure
Can interest rates go up 5%… sure. Will this lead to more bankruptcies and inventory.. possibly.
Will prices jump back like they did in 2005? Highly unlikely.
Moral of the story is you won’t need to be in any hurry to buy right now, unless you believe interest rates are going to rise as this will bankrupt a lot of people. The economy is going to take a long time to improve, prices will continue to fall.
i don’t have a crystal ball either.. there are numerous possibilities that can occur
Hi Graham,
Good to hear from you and thank you for taking the time to comment.
I have to respectfully disagree with the following “There is an over supply of properties and an undersupply of people making wages that can afford said property.”
Its 7:20 pm and I’m still at the office waiting for the second offer (supposed to be ready at 8:45) in a multiple offer situation on one of my listings. I don’t expect to be out of here anytime soon as I have to catch up work I didn’t get to last week, because I was so busy putting deals together. (May has been the best month of the year for me)
Its busy because people have confidence in the Vancouver real estate market, prices are reasonable, and money is cheaper than it ever has. There are lots of buyers out there (my listing at 1888 York Street had over 60 people through the Open House on Saturday) and there is a distinct shortage of listings (Everything I call on for buyers is sold!)
Its going to be a hot summer.
What are your thoughts?
Hi Mike,
First time to this page and pleasantly surprised to see a realtor with an education who seems to be humble yet intelligent.
As a currency trader I am inundated with ALL economic information on a daily basis from around the globe. I need this info as I trade most of the worlds currencies and like you all my clients ask where is the $ going. Short term to me is an hour and long term is a week. A lot can happen in 6 months or a year. For the most part your right that no one can predict a market bottom or top, it is all a guess. However some people will make an “educated” guess while others with too much emotion and attachment will also make the attempt.
The Vancouver real estate market will reach 2005 price levels. When? I don’t know, as I said I can’t see the future but rather rely on the economic information at hand. (although my prediction with my realtor was June of 2010 and I did put my money where my mouth was in a small bet just for fun)
A realtor is in a tough spot, the biggest asset they have is… There home? There employment? Maybe both and this is why this is a frightening subject for them. They have very little diversification as a result, everything depends on this market.
No worries though, if you take a look at one of the worst hit markets in California and did some research you would see that even though prices have fallen significantly for the last few years, 2008 had the highest $ figure of sales. Meaning prices are dropping drastically yet more inventory has moved than ever before.
We are not Japan for all the reasons you stated and a few more but there are other factors that will come into play. Lagging indicators such as unemployment will continue for example. Yeild curves are the best place to look and as much as the goverment tries to help narrow those margins they have never been successfull long term. Yes you are busy writing deals in multiple offer situations. There were 18000 realtors in 2007, how many still remain? Less competition, more work for those of you who rode it out. This is what the market does, it is forming a “right shoulder” It is spring leading into summer and you will continue to be busy (hopefully) but then I would say take the family for a vacation cause your not going to be missing much come fall.
On another note if you buy and hold, who cares. We all need to live somewhere.
Regards
Hi Dave,
Thanks for taking the time to comment! Also thanks for the kind words about my blog.
I would say you may be seeing 2005 pricing for some suites now. 2703-939 Expo Blvd is a perfect example. This was my listing and I sold it in June 2007 for $667K. The people I sold it for bought the suite for $576K in December ’05. It is now listed for $589K in June ’09.
Another thing. The market here in Vancouver is quite hot at the moment, which completely kills the more bearish commentators arguments. Low rates coupled with corrected prices have brought buyers out in force. In May ’09 I had the best month of my career.
I love markets and working in them for exactly this reason. You can never tell whats going to happen and its never dull. Scary sometimes, but always a rush!
What are your thoughts Dave?
How are the forex markets? I was reading that the Canadian Dollar is on its way back to parity. How does that affect your business?
Hey Mike,
I suppose my concern for many people is the interest rate factor opposed to the prices of property. Rates are low but can not remain so after June of 2010. We may not see the rates of the early 80′s when people were renewing there mortgages at 18% but could you imagine even having to renew at 9%? Many many people will lose there homes and who’s going to want to purchase… I saw your blog on this topic and certainly you have a point about rents going up in that environment but its the people who are leveraged on there principle residence that will be the concern.
I too can’t imagine doing anything else for the time being. I enjoy coming to work every day as each day is never the same and many days are a rush.
Canadian $ will likely hit parity by year end. We are commodity driven in Canada and we will do a lot of exporting of these materials to countries that import as we come out of this recession. This does not affect us as we work on both sides of the market (buy and sell) and all the currencies. My industry is recession proof to an extent.
Hi Dave,
Good to hear from you.
I to have concerns about the negative impact of inflation (high interest rates), but I think inflation will be a negative side effect of central banks and national governments successfully reflating economies around the world. (I had this exact conversation with a client this morning)
If and when inflation kicks off, there will be more demand in the world economy (inflation is just excess demand) caused by more than just low interest rates. People will be in work and business will be making money because the world economy should be out of recession, by the time rates begin to rise.
Leverage – Most of the people I am working with (mostly principal residence buyers as of Spring ’09) are not highly leveraged. Most (70%+) are low ratio and some are not getting mortgages. I think if go way up I think the people I am working with should be able to manage.
Good to hear things are good in your business. I like a strong Canadian $. Its good for the West and good for Vancouver AND its good for me when I go on vacation!
I understand that we are moving towards parity more because of US$ weakness rather than C$ strength. How is the C$ doing vis a vis the rest of the world?
Hello amazing topic we have going there!
+1
Hi Irramiloq!
Thanks!