Saturday, June 30, 2012

Are bloggers Public Enemy No.1 in an attack on the fundamentals?

Watching the news this week, you can  can see the real estate industry mounting their latest counter offensive to spin their message.

And that message will be... 'fundamentals don't matter'.

Despite having rejigged they way the benchmark price is calculated (twice this year, actually), the reality of the market is becoming hard to ignore.

Sales in May for all forms of housing across the Multiple Listing Service were down over 15.5% from last year, and the lowest for the month of May since 2001. For detached homes sales, the news is  even worse: They were down 25% for the same period last year.

While sales have fallen, the number of listings has risen. In the Vancouver westside, which is held up as the main beachhead for the Asian invasion, the total of active listings — those homes for sale that haven’t sold — has risen to 1,100 properties at present from 600 a year ago.

The pathetic attempts to neutralize the impact of these figures prompted Vancouver Sun columnist Pete McMartin recently to state the obvious:
Commenting on these numbers, the resolutely sunny Real Estate Board of Greater Vancouver decided this was “indicative of balanced market conditions.” But then the board would have viewed the crash of the Hindenburg as the result of “normal deflationary conditions.”
Yesterday we drew your attention to one of the latest piece by Global TV (Global reports the facts, concludes ours is now a 'depressed market', but then claims we're 'different').

 Global has also been unable to ignore the obvious:
Vancouver Real Estate had defied trends and showed steady growth for far longer than anybody believed possible. The evidence is not in the polls, which very often contradict one another, but on the ground, in the neighbourhoods where plum properties have always sold quickly and at a profit. Sellers are finding the days of multiple, over-asking offers have disappeared... and buyers are getting the pick of the crop with buyer reduced signs popping up all over the place.
They were even forced to admit that Vancouver is now "a depressed market".

So if the spin no longer works and the ugly numbers cannot be ignored, what do you do?

Invalidate the usefulness of the numbers, of course.

You could see the strategy launched when Bob Rennie spoke to the Urban Development Institute on May 17, 2012. Rennie said:
I joked with the CHMC’s board a couple of years ago, that the Vancouver market never went up on fundamentals, so why would we go down on fundamentals.  
However, our market really does have fundamentals but our fundamentals cannot be captured in a 90 second elevator conversation, at the water cooler, in a sound bite, and especially not on a blog or 140 character tweet.
And what are those fundamentals that cannot be captured in a 90 second conversation?

I think we saw that in the Global TV piece yesterday as well.

The spin we are going to see is the same as we have heard over and over before. "Rich people wanna live here.  We have limited area due to the mountains and the ocean.  And we have the scenic and lifestyle advantages of those same mountains and ocean." 

This is basically what Global TV said when they trotted out Tsur Sommerville:
Sommerville: Now we have a situation where prices aren't rising, they're flat. We have a situation were listing are rising, sales are falling and there isn't any of the kind of angst or anxiety out there in the marketplace. Instead what it's replaced with is less worries about people driving prices up and more worries about Greece blowing up the world economy.

Global Reporter: Vancouver is that market that is way different than any other kind of market.

Sommerville: Vancouver is very hard to figure out because so much of the purchases are done by wealth. Either people immigrating with wealth or people receiving wealth from parents or relatives so the normal 'what are incomes doing and what are prices doing', that just doesn't work out here well.

Global Reporter: And that may explain that while there are price reductions, average selling prices just aren't going down. Unlike other depressed markets in the world, there's no pressure to sell. And with our geography, the mountains and the ocean, it's not likely to change.
I suspect this will be the theme for the foreseeable future.

Claim prices simply can't go down here.  Tell everyone that wealth wants to be here. And desperately try to convince you to "buy now or be priced out forever".

And to the one segment of the community that the industry can't influence the peddle this message - the blogosphere - Rennie summed up his frustration in that May 17th UDI speech:
I do have a huge concern over what Tracie McTavish, the president of our company calls, your “Keyboard Courage”, referring to what is becoming a dangerous and apparently acceptable practice which is, negative market commentary that is nothing but speculation.

Speculation made by spineless, signature‐less, individuals on a blog, on a blog that in most cases has less than 500 followers.

Then the next thing you know, the mainstream media picks up on the negative as fact and all of a sudden, it’s breaking news and our industry spends the next 6 months attempting to dispel the rumors and sound bites.

The dispelling of the "rumours and sound bites" of the basic market fundamentals (ie. the inescapable reality of the hard sales data) has begun.

And it would appear that in this attack on the fundamentals, the blogosphere is being cast as Public Enemy No.1.


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  1. I'm one of only 500 people? Pretty exclusive group!

  2. F@ck Rennie and anyone that acts like him.
    Keep up the good work Whisperer and everyone else that continues to report what the msm is paid not to.

  3. "Spineless", really Bob?

    I have a friend whose husband is a portfolio manager at a major investment management firm downtown - one you've all heard of and that has been around for decades. In the spring, everyone in the firm was advised to sell their houses and rent for a couple of years. Essentially the company read the fundamentals quite differently and came to the conclusion that they don't support the BPOE hypothesis and that we're headed for a major crash. I will gladly put my money on the folks who watch markets for a living, rather than a self-proclaimed expert who is nothing more than a snake oil salesman.

  4. Replace the word "negative" with "positive" and it describes our real estate / media relationship for the last decade.

  5. Quite ironic Rennie, since the mainstream media are the ones spreading the lies...

  6. Now I am motivated to spread the words to increase viewers at this blog.

  7. But then, the quality of the content has nothing to do with the number of viewers, with spines or not.

    Maybe one day when Global TV has less audiences than this blog does, it will produce higher quality, factual content.

  8. 500 blog readers bring down a $1trillion RE market, right.

  9. You know, as a real estate bear, I'm not sure I've read ANYTHING more reassuring that the bust is coming than Bob Rennie's comments here. Seriously, if the only thing standing between Vancouver's real estate values and a bust are *bloggers* then Rennie is in deep deep sh*t. As far as I'm concerned at this point, it's a foregone conclusion. Thanks Bob!

    I'd almost feel sorry for him, but I'm sure he is quietly moving all his holdings offshore even as we speak.

  10. Fundamentals juSt have a habit of catching up with fantasy sooner or later. Global can then change their name to Disney and play Mickey Mouse cartoons all day long; that's what it really is - a Mickey Mouse channel. Sadly the CBC and others are not much better!

  11. To being more than 1/500.