tag:blogger.com,1999:blog-5936637281134795592.post6418397814039013782..comments2024-03-08T08:55:52.985-08:00Comments on Whispers from the Edge of the Rainforest: Are the swirling winds of change blowing towards a Nexus point?Unknownnoreply@blogger.comBlogger11125tag:blogger.com,1999:blog-5936637281134795592.post-35947685347900207352012-05-18T22:20:33.511-07:002012-05-18T22:20:33.511-07:00Agree completely CanAmerican.Agree completely CanAmerican.Whispererhttps://www.blogger.com/profile/03524022285962626228noreply@blogger.comtag:blogger.com,1999:blog-5936637281134795592.post-35017294893186325902012-05-18T16:41:17.852-07:002012-05-18T16:41:17.852-07:00It's not crazy. My baseline for some time has...It's not crazy. My baseline for some time has been up to a 70% drop based on return from 10x average income for a home to something historically supported like 3x. I felt the same as you thought that it seems like such a big number, but ultimately Vancouver is so over-inflated it's gonna drop. Fundamentals always prevail over the long term.<br /><br />An important thing to remember is it won't happen over night. I saw this happen in the US and it is year after year after year. Each year if the market dropped an amount, say 5% to 10%, it seemed like the normal price - and a reasonable deal at the time. After all with the latest drop, that's what buyers were willing to pay. However, looking back after a few years the drops add up materially. In my experience at some points in time, the prices even seemed to plateau, and then proceed to continue to edge down at a later point.<br /><br />If I read it right, Garth Turner reported this week YOY price drop of 10% documented in Van. That's already a start to year 1. Multiply that by 5-10 years of malaise and you got yourself the 70%. I actually think the first couple years in Van could be 15% or more.<br /><br />As an aside, I believe the market has largely been driven by locals buying from locals. Once people start holding off because of fear of market decline, it's set to decline. Once it declines, those high ratio borrowers are screwed and some small percent will begin to bail - cementing the beginnings of YOY drops and will go on for years IMHO. That will happen even without the distressed sales that will be coming, resulting from people on the edge who can't afford their renewal as near zero interest rates edge up even just a few points in the coming years.<br /><br />CanAmericanCanAmericanhttp://whispersfromtheedgeoftherainforest.blogspot.com/2012/05/are-swirling-winds-of-change-blowing.html#comment-formnoreply@blogger.comtag:blogger.com,1999:blog-5936637281134795592.post-90202657187646102022012-05-17T16:09:05.181-07:002012-05-17T16:09:05.181-07:00I think the baseline case would be a 30% decline. ...I think the baseline case would be a 30% decline. Such a decline would trash the local, if not the national, economy. If that results in CMHC failing (hardly a surprise) and dragging down the fed govt, the sovereign debt may behave like those of Greece/Spain. In such scenario, another 20-30% is quite possible.another value investorhttps://www.blogger.com/profile/07659083327214275843noreply@blogger.comtag:blogger.com,1999:blog-5936637281134795592.post-33844404812529640742012-05-17T14:41:46.817-07:002012-05-17T14:41:46.817-07:00That is the missing factor - a significant increas...That is the missing factor - a significant increase in rates. And we can see from our friends south of the border that is not going to happen anytime soon. So,one thing people hate is to take a loss(it has been shown in studies) so they will hang on. So, I do believe in a correction but 70 to 85% will only occur when a Mad Max world begins.<br />A slow bleed will be the case 5 to 10% each year for a few years.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-5936637281134795592.post-47010169183289686562012-05-17T09:50:37.463-07:002012-05-17T09:50:37.463-07:00I also think that 85% is excessive but one could a...I also think that 85% is excessive but one could argue that since Vancouver has become on of the most unaffordable cities on earth that high valuation is more prone to high percentage losses when the debacle ensues. This kind of destruction would need to be have regulation coupled with interest rates becoming very high in addition to a deep recession. When there is no bid though, things can drop in a hurry.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-5936637281134795592.post-52004003014424010372012-05-17T09:49:52.626-07:002012-05-17T09:49:52.626-07:00Hard to imagine, but soon, people, in mass will ru...Hard to imagine, but soon, people, in mass will run from real estate! I was looking for muliplex in Montreal in 1998 and the for sale sign was every where, its coming back.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-5936637281134795592.post-87490848613221570102012-05-17T08:24:46.536-07:002012-05-17T08:24:46.536-07:00Sockeye
I assume the link is for me. Read it and d...Sockeye<br />I assume the link is for me. Read it and don't see how Vegas equates and it was 61%.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-5936637281134795592.post-60345896100915783202012-05-17T08:16:28.881-07:002012-05-17T08:16:28.881-07:00Las Vegas, Nevada
http://www.calculatedriskblog.co...Las Vegas, Nevada<br />http://www.calculatedriskblog.com/2012/04/case-shiller-house-prices-fall-to-new.htmlSockeyenoreply@blogger.comtag:blogger.com,1999:blog-5936637281134795592.post-32158503713206779312012-05-17T07:54:00.580-07:002012-05-17T07:54:00.580-07:00Just to add to your day. I like the blog. One item...Just to add to your day. I like the blog. One item I find rather qualitative is your 70 to 85% correction. Just for fun I would ask you to show us a real estate market in a G20 country that has seen this type of correction.<br />Key word - "market" = country<br /><br />I will leave that with your viewers. Cheers,Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-5936637281134795592.post-70763329485206582112012-05-17T06:49:32.348-07:002012-05-17T06:49:32.348-07:00In the words of Bob Dylan "Oh the times...the...In the words of Bob Dylan "Oh the times...they are a changin' "Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-5936637281134795592.post-22311231530582816882012-05-17T06:36:58.402-07:002012-05-17T06:36:58.402-07:00Pull up! Pull up!
http://www.youtube.com/watch?v=2...Pull up! Pull up!<br />http://www.youtube.com/watch?v=2HFc6x_AtWs&feature=youtube_gdata_playerAnonymousnoreply@blogger.com