Wall Street Journal picks up on Rosenberg's analysis of Canadian Housing Market

The Wall Street Journal is picking up on Gluskin Sheff economist David Rosenberg's recent analysis about the Canadian Housing Market.

In case you missed it, yesterday the Financial Post covered Rosenberg's analysis that Canadian housing prices are not sustainable.

Jumping on the story, the Journal headlines: Bubble vs. Rubble? Rosenberg Weighs in on Canada-U.S. Housing Divide.

Many economists balk at using the “B-word” to describe Canada’s housing market. Gluskin/Sheff’s David Rosenberg doesn’t.

And remember, he was the guy who called the U.S. housing bubble.

In a report out this week, Mr. Rosenberg describes the different real-estate market landscapes on either side of the Canada-U.S. border–”bubble versus the rubble.”

Rosenberg is highly respected in the United States as an economist who pulls no punches and he gained a high profile in financial markets when as the chief economist of Merrill Lynch he rang some early warning bells on the housing market crisis and subsequent recession in the U.S.

Mr. Rosenberg’s message now: Housing prices in Canada and the U.S. have never been this polarized, with Canada’s prices on average twice that south of the border. Historically, they have been close to parity, he says, and they can’t stay this far apart forever.

Toronto and Vancouver are “undeniably desirable places to live,” but that doesn’t mean that prices in Vancouver should be 4.4 times above the U.S. average, and Toronto three times higher.

Activity in the Canadian market should cool off, with condo sales vulnerable to a 20% drop in hot spots like Vancouver and Toronto. And another tightening of Canadian mortgage rules—which went into effect this week–is sure to bite into demand.

Our friends over on VREAA have summarized Rosenberg's report and his comparative graphs.

If there was any doubt before, you can't ignore it now. The word is out across America and the world about our housing bubble and that a crash is not only imminent, but expected.

Rosenberg summarizes the situation succinctly by declaring; “Not sustainable, my friends.”

Wasn't it Tsur Sommerville who insisted that wealth would continue to pour into Vancouver to support our housing prices?

I wonder if the Sauder School of Business will come out with a report analysing how wealth ignores the evidence when making investment decisions.

I mean, don't they already believe fundamentals don't apply?

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Global reports the facts, concludes ours is now a 'depressed market', but then claims we're 'different'

If you are new to reading blogs which focus on the Vancouver or Canadian Housing Bubbles, you probably aren't aware of the complete distain many in the community have for the uncomfortable relationship that seems to exist between those work in the real estate industry and the mainstream media.

Critics pinpoint advertising dollars as the foundation of what appears to be a symbiotic relationship between the two and complain the media isn't giving the Canadian public a proper, critical view of the dangers - or existence - of the growing real estate bubble.

Worse... critical media is subjugated and transformed into nothing more than a public relations arm of the real estate industry.

And when it comes to television, no one station seems to epitomize that corrupt relationship to the critics like Global TV.

Bearish Real Estate blogs rail against the fluff pieces that Global TV seems to generate. 

In fact, when it comes to Real Estate stories, Global always seems to be the ultimate optimist.

Like the man who is finds himself standing in horse sh*t up to his waist - Global TV is the station that looks around and proclaims, "Gee... there must be a pony around here somewhere!"

This belief is hammered home by a story which aired earlier this week.

Unable to ignore the impact of market conditions, Global TV starts off it's latest examination with hard facts that would have most in the Real Estate 'bear' community believing Global is finally presenting a balanced picturet:

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. At least in the condo market. And buyers are getting the pick of the crop with buyer reduced signs popping up all over the place.

A real estate agent takes the Global reporter to several upscale apartments in choice Vancouver neighbourhoods and highlights their desirable selling points. Viewers are then told the units are being reduced in price, an action completely unheard of through most of our ballooning housing bubble.

The take on the situation from the realtor?

"If you want them (condo's) sold, you have to reduce."

This view is identical to the one we shared with you yesterday from Richmond realtor James Wong. And the Global TV reporter summarizes the real estate situation in Vancouver succinctly:

It seems to be a growing trend in Greater Vancouver. Drop you asking price to get results. With listings up over 15%, and sales down by the same amount from May this year to last year, 1 in 5 sellers have reduced their price.


What's different is the frenzy created with the flood of Asian buying has cooled.

Global rounds out the state of the current market by next showing you that even single family houses are seeing prices slashed.

But it's at this point where Global seems to change direction - dramatically.

Sales are down, listings are soaring, realtors are saying if you want to sell you must slash your prices.  A declining market, right?

Not according to the real estate industry... err, Global TV.

Global trots out their favourite apologist, Tsur Sommerville.  And suddenly Global TV makes the case that Vancouver is different. And that the fundamentals of the market simply don't apply here:

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.

Did you catch that?

Global TV slips in that ours is now a 'depressed market'.

Then they quickly gloss that over by saying that we're "unlike other depressed markets", that ours is different. Then they imply that the inevitable outcome for depressed markets won't happen here.

What drives observers crazy is that it's not Sommerville, a supposed expert, making these statements.

These are the conclusions of the Global reporter.

It's as if Global is trying to reassure the market instead of reporting on what's going on in the market (and possibly triggering panic).

Is it balance reporting or manipulative massaging of the facts?

When Global TV puts out pieces like this, and makes these types of conclusions, few in the blogosphere think 'balanced' even enters the vocabulary.

(Hat tip to GreenhornRET and Liam for the video clip)

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Mon Post #1: Real Estate Forecast - updated

Excellent interview with David Lepoidevin of National Bank on BNN about real estate last week (hat tip to Fish from Fishyre).

If you missed it you can watch it here.

Transcript excerpts courtesy of VREAA:

"Where we are concerned is regarding the value of Canadian real estate. The lessons from the world have been that real estate has had greater implications than just the value of your investment properties.”

“In Canada if you look at the actual numbers, the numbers don’t lie. If you look at median real estate prices compared with those in the US, at their peak the median US housing price was $265,000. Today in Canada, the latest figures we have is $375,000 for the median real estate price transaction. So therefore we are 42% higher in Canada today that the US was at the peak. And we’re [about twice] the median price in the US today.”

“Many of the banks are more exposed [to the mortgage market] than they have ever been. CIBC has 50% of their loans in real estate. When we got into trouble in the early 1990’s, the average Canadian bank was about 13% exposed to RE, and we know we got into a heap of trouble then [with overexposed institutions].”

“The Canadian bubble has extended far beyond the US bubble. We’re beginning to see cracks in the system and the cracks are coming from my home town which is Vancouver, which may have been the epicenter of the bubble. A stand-alone house in Vancouver was over $1 million and still is over $1 million.

Reports are coming in that Asian money is slowing to a trickle. [Real estate prices in China are dropping.] The frenzy had spilled over into Vancouver almost as a suburb of China. [The money has stopped because the Chinese real estate market has slowed but also because the investor immigrant program has ‘shutdown’.”

“If we look at the percentage of jobs in actual construction (this isn’t realtors this is actually guys swinging hammers) ... we can see that Canada, the red line, is way above not only where the US is today, but we are significantly higher at 7.5% compared with 5.5% in the US at their peak.”

“So we need to define whether there is a bubble and what I’m trying to point out to people is, yes, there is a bubble.”

“The myth in Canada is that real estate cannot go down unless there is a spike in interest rates. In the United States interest rates of 2% lower than they were when housing prices will almost double what they are today. So it wasn’t a spike in rates that caused house prices to go down it was a reduction in the availability of credit, tightening credit. We now have the first Canadian majority government we’ve had in 8 years and they are beginning to put the brakes on.”

“If we did an Internet search for ‘boom and bust’ you will find hundreds of examples in history, in various economies, of boom bust cycles. If you do an Internet search for ‘boom’ and ‘soft landing’ there are no entries. There are none. ‘Soft landing’ are the scariest words in investment history because they don’t happen. We are trying to engineer a soft landing in real estate just as the Chinese are. The NASDAQ bubble, the US housing bubble,The Canadian housing bubble... You will not find a soft landing.”

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Have I got a deal for you!

You know our housing bubble is big when the get-rich quick crowd set up shop.

Not even Ron Popeil nor the Slap Chop dude were this shameless.

Ever heard of Lucrii Investments?

No?... I hadn't either until a faithful reader pointed me to them.

And your gonna love this one (click on image to enlarge).

Lucrii Investments appears to be a 'wanna-be'  real estate investment club.

On their homepage, they offer you the chance to get in on the real estate gravy train even if don't have the cash to get in.

"How do you buy a million dollar home with none of yours or the bank's money, or obtain more properties when you have reached your limit to borrow?"

(I dunno? Scam others out of their cash? But I digress...)

Lucrii tells you you can do this by using "Creative Techniques":

How do you buy a million dollar home with none of yours or the banks money?

One can obtain between 60-80% cash value on a property from a hard money lender. This said the hard money lender will take an agreement with the property as insurance for their repayment of the funds. Because they only lend 60-80% of the FMV of the property this requires a deal where one obtains the property for 20% below FMV or more.

How can you obtain more properties when you have reached your limit to borrow?

There are other ways to obtain properties without borrowing. One type called a Vendor take back is just this. The owner or seller of the property agrees to hold the mortgage and take payments on their property with the ability to take the property back if payments are not kept. Now if your asking yourself why someone would do this, if they own the property out right and take the mortgage themselves they earn the interest rate not the bank.

Umm... okay.

Apparently their name,"Lucrii",comes from "Dei Lucrii", which are Roman gods of profit and wealth. Is that what these guys can offer you?

"Here at Lucrii investments we only deal with investments that yield the greatest profit, to do this we use a unique method to seek out only the most lucrative deals. This is the same system that has enabled top real estate investors such as Alan Casden, Donald Trump, and Theodore Lerner to be featured in forbs magazine. What this means for you is that you will be able to enter the 20%-50% below FMV arena, but what this really means is that you will be able to confidently take control of your profits there for taking you and your family to the next level."

Umm...? Did they really just call it "forbs" magazine?  Yup...

Okay... small typo.  Doesn't mean they're a bunch of amateurs, right?

I mean they tell you right here that they have almost a decade of negotiation and sales skills...

Plus... they bring you "only deals that are significantly below market value. This spells out profit wether  on a flip or purchasing to buy and hold."

(Umm... did they just misspell 'whether' too?)

So what is this unique method they use to "seek out only the most lucrative real estate deals?". What is this system that propelled Alan Casden, Donald Trump and Theodore Lerner to fame in Forbes (forbs) Magazine?

Seriously?

The contact numbers on the flyer and on the website are the same:

Scott L

Email: ScottL@lucriiinvestments.com

Phone: 604-230-7825

Tyler J

Email: TylerJ@lucriiinvestments.com

Phone: 604-562-2148

I wonder what Google can tell us about these phone numbers.

Google is littered with results relating to the rave and DJ scene, specifically concert promotion.

In fact I'm willing to bet there's just over four years of results for Tyler and Scott ("almost 10 years experience.")

It's said that at the end of all speculative bubbles you have everyone and anybody piling in to get a piece of the action.

Clearly when it comes to our real estate bubble... we're there.

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Sun Post #1: Vancouver has "too many sellers trying to cash in at the same time."

The falling Vancouver market continues to make news in the mainstream press.

Yesterday it was CBC with a story lamenting that Vancouver has "too many sellers trying to cash in at the same time."

The Mother Corp tried to balance the negativity by looking for the silver lining in a market with a huge decline in sales and a massive increase in listings.

But the best they could do was headline the bad news by saying, "Uncertain fate for Vancouver real estate prices".

While the fate of the current downward trend may be uncertain for CBC, they do tell us exactly what you have been reading here on an almost daily basis:

Vancouver's real estate market has taken another interesting turn, with listings up and sales down during what is usually a busy time of year.

In May, average prices for houses have dropped about $150,000 compared to one year ago. That 12-per-cent drop wiped out two years of price increases. The reason appears to be that too many more sellers are trying to cash in at the same time. Listings are up by 23 per cent, but fewer are buying: sales are down 24 per cent.

Probably, on average, about a 150 or 160 homes in Vancouver are reducing their price every day in the hope of catching, getting ahead of the train and maybe get out before they can't," said realtor Larry Yatkowsy.

Reality is starting to set in.

The Spring Market is not going to arrive this year. Sellers are starting to slash their prices.  The Boomer Trigger is being pulled.

Is the market starting to crash? We will see. As economist Tom Davidoff, of UBC’s Sauder School of Business says,

"It’s going to take several months of data-confirming of what we seem to be seeing before I would be anywhere close to be prepared to say, 'That's it, we had a bubble and now it's bursting.'”

But if you're a Boomer sitting on the sidelines who plans on relying on the bubbilicious values for your retirement fund... do you wait to see?

Or do you jump in, list your house with the others and pull the trigger by slashing your selling price aggressively before another 12% evaporates from the market?

And what of the ones already listed but watching a market drop while listings stagnate? Time to cut and run?

We shall see.

The video from CBC...

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Fri Post #2: Housing Bubble or Housing Zeppelin? - Updated

Great opinion piece in the Coquitlam Now newspaper on page 9 by Gord Goble today titled A Real Estate Implosion is on the Horizon: ‘Behind the propaganda and the mania is but a single house. A house of cards. And it’s teetering':

Is there a housing bubble in the lower mainland? Housing zeppelin is more like it. Bubbles, after all, are soft and cute and harmless. Zeppelins, conversely, hurtle into the ground, spewing flaming wreckage in all directions. And that’s precisely what we’re about to witness in the GVRD.

Consider the factors that have pushed our prices so absurdly high that the average family now spends 70% of pretax income to buy and own a home. Consider that we’ve already rocketed past the danger zone of most cities in the disastrous American run-up. Consider all that’s conspired to morph our region into the top two overpriced real estate markets in the world.

It starts at the top, with the federal government and the Bank of Canada. Despite doling out repeated warnings over our addiction to credit and our per capita debt, which now stands at a deeply troubling $1.50-plus per $1.00 of disposable income, those in charge have continued to facilitate easy mortgage borrowing and a credit culture. Why? For one, housing-related industries account for a quarter of our GDP. We’d look far less impressive globally were we not buying and selling obscenely expensive homes to one another.

And it filters down from there. The media, supported so heavily by real estate industry advertising (“This segment brought to you by Re/Max”), plays up self-serving industry propaganda and consistently portrays deceptive PR stunts as “news,” while blissfully ignoring realities such as plummeting sales and mushrooming inventory in former hot spots such as Richmond and Vancouver West, and an already tanking market in key neighbouring zones such as the Okanagan and the eastern Fraser Valley.

Our banks and lenders, meanwhile, squash accusations of subprime lending (loaning to high-risk borrowers – the same practice that helped crush millions of American families) while actively participating in it. Land developers literally work overtime to catch the end of the mania and the correspondingly sky-high valuations. Realtors pump the “Buy now or be priced out forever” mantra and work to falsely convince us offshore Chinese are grabbing everything in sight. Ultimately, locals are inundated from all sides with stories of unicorns and pots of gold and wrongly believe the pyramid scheme of the past decade will somehow, illogically, continue forever.

But, like The Matrix, not all is as it seems.

When the smoke clears, when developers have glutted the entire region with product (they’re almost there – just look around your neighbourhood), when realtors – mere salespeople – are no longer rock stars and pseudo-financial advisors, when the CMHC stops backing every high-risk borrower that comes calling (the corporation, run by a board with blatant ties to the real estate industry, will soon sport a much shorter leash), when newly introduced mortgage restrictions have sliced and diced the number of potential buyers, when interest rates have jumped from their emergency lows, when local TV producers stop airing dubious realtor PR stunts (helicopters purportedly loaded with offshore realtors, trumped-up condo lineups, marketers posing as investors) as hard news, when the market is flooded with the homes of bailing baby-boomers seeking to fund their retirements, when the imaginary tidal wave of incoming Chinese is revealed as the mere speculative ripple it has been, when fatigued owners realize killer home payments devastate every other aspect of their family’s lives, and most importantly, when the mania dies (manias always die) and when real estate ownership is no longer the Holy Grail, there will be nothing left but you and decades of onerous payments on a crashing asset.

You will wonder what could have possessed you to overpay by fifty or a hundred percent for a creaking “old timer” in a lousy neighbourhood or a “new” slapped-up-in-a-month-by-handymen townhouse in a future ghetto, and you will curse the day you saw the pretty ad that compelled you to do so. Your realtor will not be there to console you, your lender will not hand you free money to extricate yourself. Worse still, there will be no respite to those who, for reasons beyond their control, need to sell. They will do so at a grievous loss.

So…what do you do? If you bought near the peak (roughly mid-2011), and particularly if you’re feeling the strain already, contemplate selling – before the downward spiral picks up steam. If you’ve so far resisted the siren song, continue to resist. Instead, rent.

Renting gets a bad name in a transitory environment where even pizza delivery guys contemplate $300,000 condos, but remember: Renters are immune to exploding zeppelins. Renters are free to invest the money they saved by not buying. Renters do not surrender thousands per annum on property taxes, repairs, renovations, city utility bills, and burdensome monthly maintenance fees. And renters can move without enduring the cost and hardship of selling. Your realtor will tell you “Renting is throwing your money away.” You can tell him he’s a liar.

Buying and owning a principal residence can be a smart move. But not here, not now. Not when mania is at the helm, not while deception remains healthy, and not when the long slide they don’t tell you about has already begun. Many will lose. Heavily. Don’t be a loser.

For more discussion on the realities of the local housing market, check out two of Greater Vancouver’s busiest housing blogs: Vancouver Real Estate Anecdote Archive (http://vreaa.wordpress.com/) and Vancouver Condo Info (http://vancouvercondo.info/).

Meanwhile, we often talk about how our hamlet here on the wet coast is influenced by outside money, particularly HAM (Hot Asian Money).

There is no doubt that the downturn in the Asian markets is having an impact here.

This blog often ponders at what point world wide conditions will trigger HAM to sell their assets here to cover margin calls elsewhere. Obviously this requires global macro conditions such as external real estate markets, stock markets, foreign government policy, etc. to play a large factor int those decisions.

With that in mind, let's cast our eyes to a website called Global Property Guide which has some interesting data on the world wide housing market.

They are reporting that in fiscal quarter 1 of 2012, the global house price downturn has been accelerating as evident from their latest house price indices survey.  Here is what they have to say...

Global house price downturn accelerates: Q1 2012

House prices fell in 24 countries, of the 36 countries for which quarterly house price statistics are available, and rose in only 12 countries (click on image to enlarge):

During the latest quarter the downturn appears to have accelerated, with house price falls in 26 countries, and house price gains in only 10.

In nominal terms only 16 countries experienced house price falls during the year, while 20 countries recorded house price rises. But the Global Property Guide's statistical presentation uses price changes after inflation, giving a more realistic picture than the more upbeat nominal figures usually preferred by real estate agents.

Faster-paced deterioration in European housing markets

Ireland's price-declines have been, over the duration of the crisis, catastrophic. It is disheartening to see more agony, yet the picture really is alarming. House prices fell 18.95% year-on-year, contrasting with a decline of 'only' 13.12% during the same period last year. Furthermore, house prices were down 5.19% during the latest quarter. Tough credit conditions, an oversupply of housing, and weak domestic demand have weighed down the Irish residential property market (click on image to enlarge):

There was also an alarming increase in momentum of house-price declines in Athens, Greece (-11.68%); in Warsaw, Poland (-10.94%); in Portugal (-10.45%); in Spain (-9%); in the Netherlands (-6.05%); and in the Slovak Republic (-5.89%). All saw bigger house-price declines this year than the previous year.

Several countries whose housing markets were last year either in recovery or only just in downturn, saw a significant deterioration in their position, with house price falls during the year to end Q1 2012 in Finland (-2.05%), in Turkey (-2.32%), Sweden (-5.34%) and Riga, Latvia (-5.83%).

In other European countries, any positive changes in the momentum of the housing markets were so feeble, that they hardly signal a recovery. These countries include Kiev, Ukraine (-2.51%), Croatia (-2.45%), United Kingdom (-3.14%), Lithuania (-3.87%) and Bulgaria (-6.21%).

Some strong European markets do relieve the gloom. In Estonia house prices surged by 9.13% year-on-year, and in Austria house prices rose by 8.24% year-on-year. In fact the upsurge in these two countries' housing markets was so strong as to propel them into third and fourth place in the worldwide league table.

Other strong housing markets over the past twelve months include Switzerland (+5.49%), Norway (+5.43%), Russia (+3.86%) and Iceland (+2.25%). The 'gainers' seem to be countries whose housing markets either never experienced the recent downturn (Austria, Switzerland, Norway), or are recovering (Estonia, Russia, Iceland).

House prices in India (Delhi) and Brazil (Sao Paulo) surged further, but momentum down during the quarter

Over the year to Q1 2012, Delhi house prices skyrocketed by 24.41%, though during the last quarter, they fell 0.07%. Some other Indian cities like Chennai and Kolkata saw house price falls year-on-year, according to NHB Residex.

In Sao Paulo, house prices climbed by 18.70% in the year to Q1 2012, but the latest quarter saw a price-decline of 2.57%.

Most Asian housing markets slowing

In the Philippines (Makati Central Business District), prime condominium prices rose by 7.34% during the year. But the figures possibly exaggerate the upsurge, because they are for Makati, the heart of the Philippines' business process outsourcing boom. In South Korea house prices were up 2.67% from a year earlier.

Housing markets in the rest of Asia cooled over the year to Q1 2012, due to government measures implemented last year. House prices in Hong Kong were up a mere 0.19% on the year, after a rise of 19.80% the previous year. There were house price falls in Indonesia (-0.13%), Singapore (-1.36%), Tokyo, Japan (-2.64%) and Shanghai, China (-3.68%).

US housing market making progress

US house prices rose modestly to 0.48% year-on-year, with a quarterly rise of 0.55%, according to the Federal Housing Finance Agency's (FHFA) seasonally adjusted purchase-only house price index. In inflation-adjusted terms, US house prices were still down 2.27% from a year earlier. But this is a significant improvement from last year's 7.44% decline in house prices.

Increased affordability and a somewhat smaller inventory of homes for sale are positively impacting house prices, says FHFA Principal Economist Andrew Leventis.

Israeli house prices weakening

House prices in Israel were down 4.94% year-on-year to Q1 2012. Prices were hit by worldwide uncertainty, plus measures taken by the Israeli government and the Bank of Israel. The fall comes amid popular protests since last summer over high prices, which have not yet waned.

New Zealand firm, but Australia under pressure

House prices in New Zealand climbed by 0.82% over the year to Q1 2012, after falling 4.79% the previous year. Sales activity has been strong for the last few months, with volumes at the highest levels since 2007.

Australian house prices fell for the fifth straight quarter to -6.04% from a year earlier, the longest downturn for a decade. The central bank has maintained the highest borrowing costs among major developed nations.

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Fri Post #1: Bob Hoye's thoughts on Vancouver Real Estate and investing.

Meet Bob Hoye.

He is Editor and Chief Investment Strategist of Institutional Advisors, an independent financial market forecasting firm, and a frequent guest on a local Vancouver radio investment show 'Money Talks' with Michael Campbell.

Hoye gained some local fame when, in October 2007, he appeared on 'Money Talks' and told listeners that it was time to take advantage of a once in a generation market dislocation. Hoye boldly predicted that "a credit tsunami the likes we haven't seen in generations is about to hit."

A few days ago Hoye was back on 'Money Talks' with some additional advice that included some thoughts on real estate and gold.

Hoye was very clear that he believes we are now at another critical point in the markets and that its now time to either save your capital and get out of the way, or make some money.

Hoye thinks that there is no way that the Federal Reserve or other Central Banks around the world can overcome the Worldwide deflationary pressures we currently face.

His opinion is that there will be no inflation as "the credit contraction is, and will continue to overwhelm interventionist Central Bankers who are not issuing credit that pushes prices up".

Why? Bond vigilantes in a word.

As the Central Banks in Italy and Spain have found out they have to raise interest rates on their bonds to attract investors, and when interest rates rise Governments and businesses alike "cannot service the debt that is out there".

Worse Hoye sees that the the latest recovery from March of 2009 "in North America is rolling over, probably as we speak. Its already dead in Europe where they've had two quarters of negative GDP growth which defines a recession, and also perhaps really slowing down in China which shows up in your basic commodity prices."

With the economy contracting there is "nothing that government economists and Central Bankers can do to issue credit that is going to overwhelm the natural tendency for credit to contract."

What does Hoye think this all mean to today's investors?

1. Real Estate:

In short Hoye thinks that real estate is not going to recover in this post bubble economy. Worse, very high real estate in places Vancouver are going to experience a fall in pricing like US Real Estate. Hoye points out that after the 1980 boom the British Properties in West Vancouver and and high end properties in Toronto fell to 1/3 of their 1980 highs. Hoye cites history to support his post bubble real estate argument by looking back to a farm price index after the 1873 bubble in England. That index of farmland values hit 58 at the height of the bubble in 1873 then fell consistently for the following 20 years down to 38. In other words it was just a long bear market in land values after a typical post bubble economy.

2. Interest Rates:

Hoye thinks interest rates will remain low as long as confidence remains in the North American sovereign debt market."You have this oddity in the US of 10 year notes at less than 2%, and the only way I can explain these low interest rates is that in a post bubble crash the serious money that's still around goes to the most liquid items and that is gold, and it also is treasury bills in the worlds senior currency which is still the US Dollar. So its not the Federal Reserves policy to lower interest rates, its a post bubble condition that short rates fall".

3. "The Gold Market is Extremely Oversold"

Hoye is a strong proponent of buying Gold Stocks. "Just looking at the Gold Shares now, we have an index in Gold Shares going back to 1900 and there has been only one other time were it has been this oversold and that was in 1924. So one could say that this is about the most oversold you can get, and our advice on Gold Shares a few weeks ago is that people should be accumulating good quality Gold Shares into weakness. It might take another week to set the low in here, but then the performance out of this oversold should be rather good. I am content buying either good exploration stocks where you know the story, or some of the senior Golds or Gold share ETF's".

The most interesting part of the interview for me was Hoye's comments about real estate.

"very high real estate in places Vancouver are going to experience a fall in pricing like US Real Estate.... after the 1980 boom the British Properties in West Vancouver and and high end properties in Toronto fell to 1/3 of their 1980 highs."

That's a 66% collapse is real estate values.

The bubble we have created this time around has blown far larger than the 1980's version.  If property values could collapse 66% then, why is it so shocking or inconceivable to imagine that they could fall at least 70-75% this time around?

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Bubble? What bubble? - The counter offensive begins

So what if the mainstream media is abuzz with talk of a Canadian Housing bubble.

And yes, articles abound that trouble looms on the horizon.

Sales are tanking.  Listings are soaring. So what's a realtor to do?

Trash all this bubble talk, of course.

Enter Condo King Bob Rennie;

"It’s not a bubble. With the 80% of the [condo] market that traded in [Metro] Vancouver last year, you only needed a household income of $52,800 to purchase. That’s not a bubble story.”

Rennie's comments come courtesy of an interview with the Vancouver Sun following his keynote address to the Urban Development Institute Thursday.

Rennie sees aging baby boomers with billions of dollars in equity becoming a much greater force in the condo market as they increasingly downsize from expensive single-detached homes, and put money aside for their children.

Rather than seeing a market crash as hundreds of thousands of boomers dump bubble inflated single family houses and downsize, Rennie has a different take.

Noting that the number of people between 55 and 64 will increase 38% between 2009 and 2018, those between 65 and 74 will increase 56%, and those between 35 and 54 will only increase by 4.6%, Rennie views this as positive - particularly for his niche focus in condos.

“I believe the leaner, meaner baby boomer is the game changer. Baby boomers are sitting on $88 billion in equity in Greater Vancouver and they’re looking at their retirement years. That equity will be freed up over the next 15 years [and] when they sell their home, they’ll buy down and help their kids.”

Rennie said there were about 19,000 condo sales in Metro Vancouver in 2011, and that while the average price for 80% of those condos was $315,000, the overall average price was $427,000, which required an income of $66,000 to finance.

And, as we noted in our discussion about Marine Gateway, Rennie has a number of big projects coming to market this year... ergo the never-ending sales pitch continues.

Meanwhile our buddy Tsur Somerville, director, centre for urban economics and real estate at UBC's Sauder School of Business, chimes in as well.

He also doesn’t believe there’s a real estate bubble in Metro Vancouver because there’s not an explosion in housing starts.

Somerville says that while the affordability numbers have been skewed by the higher end parts of the market – “there were double-digit increases in Richmond, Vancouver, Burnaby and West Vancouver, with single-digit increases everywhere else” — the region is still very expensive compared to other cities in Canada.

“Compared to other cities, that income [$52,800] gets you a house. Here, it gets you a condo. That means we’re expensive, but that’s the reality of what we are. It’s still an expensive place to live, but it’s not unaffordable. You’ll end up smaller and further away from the core.”

Bubble? What bubble?

That's clearly what's emerging as the counter offensive theme by the industry right now, a theme which continued over on Global TV.

Adding to the 'non-bubble' message is this treatsie... "just because sales are slumping, don't bank on prices doing the same":

Announcer: “Is the Canadian housing market a bubble ready to burst, or is it steady as she goes? Finance Minister Jim Flaherty is warning Canadians against taking too much debt against the value of their homes, but the latest report from the Canadian Mortgage and Housing Corporation is dismissing those fears saying there is no clear evidence of a real estate bubble.”

Tsur Sommerville: “There is clearly a slowing down in the market you see an increase in the number of listings, drop in sales, all things that create less pressure on the market.”

Announcer: “According to the Real Estate Board of Greater Vancouver home sales were down 19% compared with this time last year.”

Helmut Pastrick: “The comparison to last year was heavily influenced by the change in the federal government’s mortgage insurance criteria which pulled forward a large number of sales into early 2011. So we’re comparing that high point to activity so far this year.”

Announcer: “But don’t get too excited, even though sales are down, home price indexes show a 4% increase in the price of a home in greater Vancouver. … The message to buyers, the economy is in reasonable shape, there’s a lot of supplier there, and interest rates are low. So just because sales are slumping don’t bank on prices doing the same.”

Tsur Sommerville: “We don’t have a sort of financial environment where people are looking at major financial corrections, you know, double digit increase in interest rates, or, you know, huge tightening of liquidity, that just doesn’t seem to be on the horizon, you know, to expect across-the-board 10%, 15%, 20% drop in house prices, I think that being rather, er, hopeful, for a buyer to expect that.”

The message is clear. Don't be deceived by slumping sales and burgeoning listings. Prices aren't coming down so stop waiting.

Now is the time to buy. What are you waiting for?

(hat tip to Greenhorn for the video archive and VREAA for the transcript of the Global clip)

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The media says... HAM is "fizzling out"

So I was sitting in a cafe near Canada Place this morning with a group of 'friends of friends' who had just finished running the Vancouver Marathon (or in their case... the half marathon) and the topic turned to real estate.

One astute member for the 'friends of friends' clan was explaining to a colleague about why downtown condo prices, which have been falling recently, will continue to fall.

Our table was long, but my ears had not deceived me. The bear case was being eloquently laid out!

Listening in, my heart shone as this learned individual explained the current market dynamics.

It wasn't long before your faithful scribe chimed in about the impending OSFI changes to LTV mortgage renewals to complete the discussion when he turned and said, "ah... so you know all to well what's going on!"

Indeed... and clearly I'm not alone as one glance at the weekend papers indicate enlightenment isn't just occurring in local cafe's.

For several years now this, and other blogs, have ruminated that the phenomena of HAM (Hot Asian Money) was not a panacea to the everlasting inflation of our housing bubble.

And as the Spring market fails to materialize, it becoming very evident to all that Chinese buyers are not going to save the market.

It's so evident that even the local newspaper columnist Frances Bula is now writing about it.

Bula writes that the:

"boom of sky-high prices for Vancouver west-side houses – one that provoked media around the world to claim with scant proof that mainland Chinese investors were buying up the city – is fizzling out."

Bula notes that a house in the 3000 block of West 24th Anenue, first listed at near $4.5-million six months ago, sold on April 15 for $3.35-million, over $1 million chopped off the asking price.

Fresh statistics from the Greater Vancouver Real Estate Board show the number of sales on the west side is down by nearly 40% for the first four months of the year. Only a third of the nearly 400 homes listed in April have sold – one of the lowest rates in the region.

And Bula quotes west-side realtor Marty Pospischil, who specializes in selling single-family homes owned by long-term residents, who says that last year, 90% of his 100 house sales were to “offshore buyers”. This year, it’s less than a tenth of that.

Pospischil also noted:

“We’re now seeing a 50% collapse rate in deals, when it’s usually more like 5%.”

The reason?

In addition to the lack of money flowing from China, there is another factor hitting sales hard.

“Banks are now requiring borrowers to disclose incomes and assets before mortgages are approved, as of the last six weeks.”

Meanwhile Bula quotes another west side realtor, who specializes in single family homes. He notes:

“I always thought that market was not sustainable. Every local person was juiced out of the market. The average household income on the west side doesn’t support those prices.”

Wow!

Not that we haven't been saying the exact same thing.

But to see these types of headlines coming from mainstream media in the Vancouver real estate scene, it tells you this is a market in trouble.

For if HAM is evaporating, mortgage rules are tightening and local incomes can't support the current bubble prices; it means there is only one way the market can go.

As long time residents painlessly slash $1 million dollars off those sky high prices for homes they only paid $60,000 to $80,000 for back in the mid-1970s, you have to wonder how long before the free-fall in prices starts?

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Blindsided?

Sigh.

Everywhere you look these days, it seems the media is screaming about the housing bubble.

The latest is CBC who tell us the Canadian housing market is overpriced and bubbly in many areas.

Meanwhile real setae sales data from Vancouver is just plain ugly.

Listings are shooting upward and sales are slowing dramatically. Sales for April 2012 are down 13.2% from April 2011. They dropped 2.6% from the March 2012 total, a month which was down 29.6% from March 2011.

Detached home sales are down 19.7% and the average single family house price has plummeted by $100,000 so far this year.  The surprising gain of last month has been quickly and suddenly wiped out as you can see in realtor Larry Yatkowsky's graph (click on image to enlarge):

The always strong 'Spring Market' is a complete no show.

Garth Turner reports that in the Vancouver suburb of Richmond over 75% of property deals are now going for less than the assessed value. Says Turner:

Forget bidding wars. This is becoming a realtor graveyard. Suddenly owners are doing what always happens in a market dive – realizing their paper profits will turn vaporous if they don’t cash out. Listings rise, sales don’t and prices fade – the classic vicious cycle.

But despite all the media hype, the average joe on the street is still oblivious to what is going on.

In the US, when the real estate bubble burst, many real estate investors found themselves blindsided. When everything fell apart, they never saw it coming.

Chatting with a few people today... despite all the media attention, so many are going to get blindsided by what's coming.

No one wants to see it.

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Doomsday Defined?

It's been an intriguing week that was for those who follow the trials and tribulations of our real estate bubble in Canada.

If you missed it, there was a stunning development last week that has rocked the industry.

In a series of interviews, Finance Minister Jim Flaherty shocked everyone in R/E by alluding to far-reaching changes to the foundation of Canada’s housing market.

And the website Canadian Mortgage Trends (CMT) had a great post which summarizes the issue.

CMT notes that for 58 years, the Canadian government has offered mortgage default insurance to qualified Canadians. The idea has been to make homeownership more accessible, which in turn bolsters the broader economy. Now, the government’s direct support of that insurance is in question as Flaherty came out and said:

“Over time, I don’t think it’s essential that a government financial institution provide mortgage insurance in Canada. I think what’s key is that mortgage insurance is available at a reasonable cost in Canada. I think there is a role to regulate but whether we, the Canadian people, have to be the owners and shareholders of a financial institution to do this is a question. I don’t think it’s essential in the long run.”

CMT observes that Flaherty, with his comments, has put the government’s support of housing finance in doubt.

CMT then goes on to defend the status quo and I'll let you check out their article at your leisure.

There was, however, a stunning statistic that caught me eye near the end of the post.

CMT notes that, according to CMHC’s stress tests, a chilling statistic is revealed. CMT observes:

"As of Q3 2011, CMHC had $17.4 billion in capital set safely aside to cover claims. In a doomsday scenario, CMHC sources have assured us that it could handle obscene prime default rates on the order of 3.00% or more."

Now... CMT hastily downplays this statistic by saying that a 3% default rate is "three times the all-time high of 1.02% in 1983, which occurred after a year when fixed mortgage rates averaged 17.89%." Hence how they come to believe a default rate of 3.00% as 'obscene'.

Somehow that's supposed to make things alright.

But there's one small problem. When mortgage rates averaged 17.89% in 1983, the average mortgage was around $40,000 - $50,000. And the most recent average homes selling in the market were going for around $100,000 (and none of them for only 5% down or an amortization more than 25 years)

Much of the debt taken on during the late 1970's was acquired during a period when rates were over 15%. People KNEW what they were getting into.  Those that had problems were those who got trapped renewing their mortgages around the time rates topped out at 22% (yes... people had to renew a mortgage at 22%!).

The real takeaway is this: A DOOMESDAY scenario today is considered a default rate on the order of 3.00% or more. And any scenario under consideration where defaults reach 3.00% is classified as so unlikely that number is called 'obscene'.

Hmmm. Allow me, faithful readers, to draw you attention to Garth Turner's blog post today., He notes that currently "there are 220 foreclosures on the market in Edmonton alone, or about 5% of active listings."

Recall a post I made recently about The Boomer Trigger. 70% of Boomer's do not have adequate funds set aside for retirement.  Their plan is to sell their bubble inflated real estate, downsize and live on the difference.

The Boomer advantage in the current stagnating Vancouver market is that if they tire of waiting for their property to sell at current bubble rates, they can dramatically slash their asking price and still realize an acceptable profit.  The Boomer Trigger post profiled one such example where a seller knocked almost $1 million off his $2.3 million asking price.  In that he probably only paid $60,000 for the house in the mid 1970s, it wasn't a problem.

The new blog, Vancouver Price Drop, profiles another example of The Boomer Trigger.

This house, at 5638 Crown Street on the west side of Vancouver, is currently for sale:

On March 09 it was listed for $2,398,000 (MLS listing V934064).

On March 13 the listing price was dropped $100,000 to $2,298,000.

On April 04 it was cut to $2,248,000, chopping another  $50,000 off the asking price.

On April 13 another $50,000 was chopped off the asking price (now $2,198,000).

On April 23rd the listing was revoked and on April 25 the house was relisted for $2,150,000 (MLS listing V945487) and another $48,000 was taken off the original March 09 asking price.

Three days ago, on April 27, the price has been reduced again. It has come down to $1,988,000, a drop so far of $410,000 from the initial asking price.

In total it's 17% off the original asking price in less than 2 months.

Now, it's clear the sellers set the price to high to start.  But the price they choose was consistent with what homes had (and 'had' is the operative word here) been selling for in the neighbourhood.

But with all the bubble collapse talk going on (combined with the over 70% increase in available listings since the start of the year), the sellers are clearly very worried.

The number of price changes in a short period of time shows their desperation (hence the reason the listing was pulled and a new listing put out... an attempt to hide the desperation).

And the fact of the matter is... they can accept a much lower price.  It's the Boomer advantage. Accepting an offer at this point that shaves another $500,000 off the asking price is not out of the question.

Meanwhile all those who bought at those lofty prices in the past year, they have just seen their 'investments' evaporate by 17%.  And this trend will only pick up steam.

Later this year, new regulations being enforced by the OFSI (the banking regulator) will require loan to value ratios (LTV) being enforced when mortgages are renewed.

If "doomsday" is only a 3% default rate, it's not hard to see the grim reaper appearing on the horizon.  

Because if this trend gathers steam, the Boomer Trigger will leave a huge number of people who bought in the last 5 years massively underwater.

And they simply won't be able to renew their mortgages under an OFSI strictly enforced LTV ratio requirement.

If this were to come to pass, a default rate of only 3.00% would be a godsend.

We continue to watch with... (dare I say it?)... obscene fascination.

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Thurs Post #2: Now it's the Royal Bank warning of a correction!

Canada's largest bank, Royal Bank, has now joined the chorus of real estate doomsayers by coming out and proclaiming that the Vancouver housing market is vulnerable to `significant downturn'.

Robert Hogue, senior economist at RBC,  says there are fundamental factors supporting what he acknowledges is a "volatile" market.

In an RBC report Hogue wrote that prices are expected to decline for two key reasons: high prices and the dependence on wealthy foreign investors.

Hogue says these factors:

"... make the Vancouver-area market more vulnerable to a significant downturn than other Canadian markets if an unfavourable economic scenario or unforeseen shock (such as a change in China's policy regarding capital outflow) were to unfold. The constant flow of wealthy buyers coming from abroad is poorly documented, leaving the dynamics of the city's market rather opaque and opening up the possibility that critical market developments could be missed. For this reason, and the fact that the extremely poor affordability levels, quite frankly, make us uncomfortable, we urge caution."

Tsur Somerville, director at the University of B.C. Centre for Urban Economics and Real Estate at the Sauder School of Business, is often chided by bear bloggers for his pro-bull market analysis. But even Somerville is changing his tune.

"Were the inflow of capital from immigrants and investors to dry up or be reduced, that would put downward pressure on housing prices."

Somerville wouldn't predict how much prices would drop but did say;

"I have no idea and given what we don't know, you can't really model the market. It's very hard to figure out what's going on in the Vancouver because there are all kinds of don't knows. We don't know how many of those buyers are foreign buyers, you don't know how many are strict investment, you don't know how many are permanent residents, and you don't know how many are occupying their units."

How's that for turning on a dime? Sommerville out and out admits you really can't model the Vancouver market.

Perhaps he should stop allowing himself to be quoted as an expert on the subject, then. But I digress.

Hogue, who hedges his comments by hesitating to call for an out and out collapse, does note that the market is subject to "extreme unaffordability" and says that a typical Vancouver-area homebuyer would need to spend 92% of their income to carry the costs of a two-storey home, and as much as 45%of their income for a condo.

That this market will correct, and correct significantly, is gradually becoming obvious to anyone who doesn't let hope cloud observation.

Can you see clearly yet?

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Tues Post #2: Richmond continues to struggle - but not according to the mainstream media

Was it only January 2011 when we were comparing the red hot real estate market in the Vancouver suburb of Richmond to Holland's historic Tulip Mania?

Then came the Tsunami in Japan and as we predicted, Richmond was about to undergo a massive Paradigm shift.

Richmond has gone from a sellers market to a market where inventory is building up in a massive way.

In fact it was that growing inventory that prompted one seller we profiled to accept an offer almost $1 million lower than his asking price (an amount which was 40% less than that original asking price) in order to sell in that stagnating market.

And make no mistake, Richmond is stagnating.

As VREAA noted two days ago,  Richmond inventory has hit all time highs. Richmond detached home inventory is now over 1,021 homes available for sale.

It's been a deadly combination... increasing inventory and sales which have continued to tank month after month.

According to Richmond Realtor James Wong, the total number of homes sold in March, 2012 came in at a paltry 309 units, a drop of 5% from the total number of sales in February (324).

The total number of detached homes, townhomes and condos/apartments listed for sale at the end of the month totaled 2,330 units, an increase of 11% from February's total inventory of 2,100.

Wong pointed out the silver lining when he noted that the supply of homes in Richmond at the end of March resulted in an Months of Inventory total of 8.24 months, a slight decrease compared with the previous months figure at 8.82 months of inventory.

But the problem is that the overall supply of detached homes, townhomes and condos increased those listings overwhelmed the increase in sales.

And while Wong tries to spin the positive on the news at the end of his report, bear blog followers pass on a different story entirely.

VMD tells us:

“There are more and more people over at the Chinese [internet] forums reporting price drops in their neighborhoods (be it Richmond condos or Coquitlam SFHs). More people are voicing their skepticism that Vancouver RE market will continue to go up. Many already accept the view that Van RE price will decline at least a couple % this year.

People are noticing the glut of thousands of upcoming Richmond condo units, and are advising against buying at this time. A few people are saying their close/trustworthy Chinese Realtor friends are saying the RE market isn’t looking good; however the other Realtors (whom they’re not close to) are still trying to paint a rosy picture.

Sentiment is changing, even among the HAM.”

Of course don't let all these 'facts' get in the way of believing in the future of the real estate in Richmond.

And naturally it's the Vancouver Sun who leads the cheerleading charge.

Recently the Sun provided us with 24 Reasons Why Richmond Real Estate is Booming.

Booming?

You simply can't make this stuff up.

So here, for your entertainment purposes, are the Vancouver Sun's top 24 reasons Richmond real estate is 'booming':

1. ASIAN INVESTMENT: With a mountain of money trying to get out of Hong Kong and china in expectation of economic collapse, the stability of Richmond real estate has drawn many investors to purchase property sight unseen. Reports of tour buses being taken from property to property, and strangers offering briefcases filled with money at the door are no longer uncommon.
2. SPORTS FACILITIES: Richmond has invested in all-weather sports facilities at a variety of local parks, as well as the much-hyped Richmond Olympic Oval, which hosts a wide array of sporting events, both amateur and professional.
3. SALMON: If you like fresh salmon, being able to walk down to the fishing boats and buy it fresh out of the water is a big plus.
4. BEDROOM COMMUNITIES: While Richmond has a reputation as an Asia-centric area, there are a growing number of communities that are entities all to themselves. The cultural contrast between Richmond Centre and Steveston couldn't be any starker, #5 Road's 'highway to heaven' presents a community of different communities, there are Ukrainian enclaves, Asian suburbs, spillover New West suburbs, and a growing number of young urban professionals around the Canada Line. The River Green development by the Olympic Village will be a small city of its own when it's completed.
5. SUMMER FUN: On summer weekends, thousands of people invade Richmond to take part in events, amateur sports, walk the docks and buy fresh fish.
6. FOOD SECURITY: Richmond is the last place in Metro Vancouver where food is locally grown in commercial quantities.
7. PLENTY OF DEVELOPMENT: Richmond's city council has a reputation for being developer-friendly, recently having allowed the construction of B.C.'s first wood-constructed six storey apartment building, which was consumed by fire before it could be completed.
8. THE DAILY MASSEY TUNNEL JAM: While home prices in nearby areas such as Ladner and Delta are comparably inexpensive, the dependence of commuters on having to make it through the Massey Tunnel during peak hour is a big turn-off for many.
9. THRIVING ARTS SCENE: From the often-photographed derelict houseboats of Finn Slough to the gigantic heads on display at Lansdowne Centre as part of the recent Biennale, to movies on the beach at Gary Point, to packed houses at the Gateway Theatrem Richmond has formed a growing local arts scene that fees the cultural needs of locals and immigrants alike.
10. GEOGRAPHY: The simple fact of it is that nobody is producing new land in the city of Vancouver. The only way to build is up, which means there's a high spillover into areas like Richmond. With Surrey and Burnaby still fighting the stigma of being seen as working class cities, Richmond's increasingly big money has helped it shed the tag of an immigrant town.
11. FOOD! Lovers of fine food have a lot of munchie options in Richmond, from some of the best Chinese restaurants in the world to hip new modern eateries.
12. LOW PETTY CRIME/HOMELESS RATES: While there's certainly crime and homelessness in Richmond, the numbers are far lower than elsewhere in Metro Vancouver, especially downtown.
13. THE CANADA LINE: A new Skytrain line directly into the heart of Richmond has spearheaded much of the recent development in the city, giving commuters a way into downtown Vancouver in 25 minutes while residents of Coquitlam, Langley and Delta find themselves often fighting bottlenecked traffic.
14. PARKS AND TRAILS: Walking the dyke is a regular go-to outdoor activity for Richmondites, but with Richmond Nature Park, Garry Point, and Terra Nova as places to go to get away from it all, it's easy to get intentionally lost in nature south of the airport.
15. CLIMATE: While Richmond gets as cold as anywhere else in Metro Vancouver during the winter, it generally receives less snowfall, less rain, and much less smog than other parts of town, due to the jet stream coming directly off the water, rather than over the Lions.
16. ABUNDANCE OF TEAR-ME-DOWNS: There are plenty of homes in Richmond that were built on the cheap in the last forty years, with no architectural appeal and large lots. These can usually be easily demolished and turned into townhomes or large modern family homes with little local protest, whereas similar development in Vancouver can be frought with bureacratic impediments.
17. OLYMPIC EXPOSURE: Having Richmond shown to hundreds of millions of people around the world during the recent Winter Games has given the city no end of interest from companies and immigrants looking to move somewhere new.
18. OPEN SPACE: Though much of it is listed under the ALR, Richmond has no shortage of open space that can be (and often is) turned into developed land. The infamous Fantasy Gardens was recently bulldozed to make way for a new development at Ironwood, which is one of Richmond's thriving new communities.
19. AVAILABILITY OF PURCHASE OPTIONS: Recent development in Richmond has vastly increased the real estate inventory available to prospective buyers, with waterfront views and modern facilities being a big draw.
20. COMMUNITY EVENTS: Weekend festivals such as the Ship To Shore tall ships event give locals a regular diet of things to do that cost little or no money. The annual Children's Festival, regular musical events and summer outdoor movies add to the fun.

Now keen observers will note this is only 20 reasons from a list that was supposed to provide 24.

Where are #'s 21, 22, 23, and 24?

Unfortunately if you follow the link above and click your way through the '24' reasons, you will discover that there are only 20 listed.

Presumably the last four are a take on the Location, Location, Location mantra.

In this case it would be... Gullible, Gullible, Gullible Gullible. Because that's the only way to describe the mindset that believes these factors off set the reality that is occurring in Richmond.

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