Tues Post #2: Metro Vancouver Real Estate achieves a 'New Paradigm'

If you have followed the topic of real estate bubbles, you have seen the above graph (click image to enlarge).

Titled 'The Main Stages of a Bubble', it is a representation of the stages that all bubbles (real estate or otherwise) travel through.

As we watch our Real Estate bubble in Vancouver, one has to wonder if we are now approaching the end of the third stage of the bubble process; the Mania Stage.

The Mania Stage has four basic phases: Enthusiasm, Greed, Delusion and New Paradigm.

Many real estate bears, salivating in 2008/2009 that the bubble might have been bursting, thought we had seen the end of the Mania Phase.

But watching events over the past 18 months, many will surely say the current market qualifies as delusion bordering on a new paradigm.

Have we indeed made that transformation?

How else to describe the belief by some economist's that the 'threat' of a bubble forming in Metro Vancouver has dissipated?

A Conference Board of Canada report released today quotes senior economist Robin Wiebe as saying not only has “the threat of a bubble largely dissipated” in Metro Vancouver “but, really, there never was one.”

See? There never was a bubble. Our market has achieved a New Paradigm.

Perhaps this explains why, in the current mania, we see the asking price of this Shaughnessy Mansion almost double from $17 million to $31 million.

Or why we see this downtown Penthouse condominium, which sold last year for $18.1 million recently relisted for a stunning $28.8 million (click on image below to enlarge MLS screenshot of listing).

The chutzpah for these types of increases is emboldened by the belief we have achieved that 'New Paradigm'. And the new paradigm viewpoint has been further reinforced with the proliferation of articles, like this one, explaining why the influx of Chinese money won't dissipate.

For those who study Bubbles, it has always been difficult to truly appreciate how pervasive and engulfing the Mania Phase can be.

People still look back at Holland's tulip mania in the 1600's with a sense of bewilderment. Long considered the first recorded speculative bubble, the peak of tulip mania saw single tulip bulbs selling for more than 10 times the annual income of a skilled craftsman.

Peering back across the gossamer waves of time, it's often difficult to comprehend how the enthusiasm for tulip bulbs could beget the all-consuming greed that leads to the delusional prices which then entrap a nation into believing that somehow a new paradigm could be created in the price of tulips.

By the time our current situation bursts, residents of the Village on the Edge of the Rainforest will be experts on just how a inexplicable Mania can completely grip a populace.

People will say "it's just real estate" the same way we now look at them as "just tulip bulbs."

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Mon Post #1: Not a single new home sold!

After taking the weekend off, we return to posting this morning with the big news for real estate watchers on the Wet Coast of Canada: not one single new home sold last month on the west side of Vancouver.

The significance of this cannot be understated.

For the past couple of years Vancouver’s west side housing market (along with that of the Vancouver suburb of Richmond) have been  red hot.

Back in March of 2011, Real Estate Board of Greater Vancouver president Jake Moldowan said in an interview that “it’s a huge sellers’ market, the strongest in those areas I’ve ever seen. And there’s no question that it’s the offshore market that’s focused on these two areas.”

According to the March 2011 report by the REBGV, demand for detached homes remained strong across the region, with particularly high sales volumes and price increases in Richmond and Vancouver's west side. In fact Moldowan said that it’s single detached homes in Richmond and Vancouver’s west side that are the most sought after properties in the entire Lower Mainland marketplace.

September 2011 marks the first 'no new home sale' month on the west side of Vancouver since records started been complied in 1994. Even the minicrash of 2008 saw four sales of new homes on the west side.

According to data released by realtor Larry Yatkowsky, there has been a 5% drop in the average price from last month and a 10% drop in the single family house average since the bubble highs of May, 2011.

Are the September numbers an indication the last remaining real estate bubble in the Western world has started to turn?

Time will tell.

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Hitting the snooze button...

Last Thursday we commented how real estate sales in Vancouver are on track for another dismal month.

If the trend holds out, sales will once again be among the lowest in the last decade - the fifth consecutive such month.

But as the Vancouver Housing Blogger noted in the comments section of the Vancouver Condo Info blog (VCI), "not only will sales be the 2nd lowest over the last 10 Octobers, but listings will be the lowest in the last 5 years. If it were a hot market, sales would be booming. They’re not."

That's a stunning situation. Low listings and low sales.

Sellers are yanking their listings off the market and waiting until 2011. The hope is that the dearth of listings will re-ignite the market.

But with interest rates at their lowest levels in history, where are the buyers?

In 2009 prices had dropped by 10%. Emergency level interest rates combined with the 10% price drop drew many into the market.

But prices have not begun to drop yet.

As I have already mentioned, many observers anticipate ongoing minor price drops through October, November and December. Then, in the first half of 2011, you will probably start to see speculators, boomers, foreign holders, overextended locals and developers all come to the market.

By then we will probably be looking at 8-10 consecutive months of the worst sales in over a decade.

As VHB noted, "the Vancouver real estate market has hit the great snooze button."

Will the market wake up in Spring 2011 with a giant hangover?

Meanwhile in West Vancouver...

This isn't to say we aren't seeing price reductions, especially at the high end (where are those wealthy Asian buyers who will keep luxury prices where they belong?)

This Arthur Erickson built home at 1812 Palmerston Avenue was originally constructed as a four-bedroom family home but was renovated into a three-bedroom by the previous owners.

Sold in 2003 for $2,375,000, it has been laguishing for sale on the market for over six months with an asking price of $5,695,000.

Recognizing the current state of the market, the seller came down on his asking price and the home has sold for $4,750,000.

That's a drop of 17%.

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Inflation... and Realtor 'Incentive'

On the right side of this blog some of you will have noticed that under the spot price of Gold and Silver, there is a chart called the US Dollar Index.

This index measures the strength of the US Dollar. A few weeks ago it was up over 80. This week it slid below 77 - which is big news.

It's indicative of a weakening US Dollar.

Perhaps at work you know some co-workers who this week are all giddy that the Canadian Dollar and the US Dollar moved to parity. Some, no doubt, rushed out to exchange loonies for greenbacks for upcoming trips to Vegas or other locals south of the border.

It's not so much a testament to the strength of the loonie, but it owes more to the weakening of the US Dollar.

Such developments are a big concern to OPEC. The oil producing Arab nations trade oil in US Dollars. And a weakening US Dollar means they are getting less for the same amount of product.

"The U.S. currency’s weakness means the 'real price' of oil is about $20 less than current levels," said Venezuelan Energy and Oil Minister Rafael Ramirez after yesterday’s meeting of the Organization of Petroleum Exporting Countries in Vienna.

Their response?

The OPEC nations want to push the price of oil from the current $80 to $100 to offset the declining value of the dollar.

And since the Canadian Dollar is at par with the American Dollar, it means you and I will also feel this 20% increase in the cost of everything oil related - which is just about every aspect of our lives.

This is another example of currency induced cost push inflation at work.

'Real' inflation last month raged at 8.5%. Look for it to accelerate in the coming months.

Vancouver Real Estate

As we noted earlier this week, the slow melt is meeting the winter freeze and the chilling sales climate will clash with stubborn sellers in a stalemate which will probably last until spring.

Come springtime many observers believe you will start to see sellers move on their prices and the decline will finally start.

And a primary impetus that will push the stubborn sellers to move on their asking price will be Realtors.

This month BCREA's pumper-in-chief, Cameron Muir, has made much of the declining numbers of listings on the market. He pumps this as a move to a 'more balanced market'.

Through the late summer and early fall, many owners have tested the market waters. They put properties on the market, only to remove them when buyer interest proved to be reduced. Many of these owners plan to put those same properties back on the market and many will likely do so in spring of 2011

As our friends over at VREAA have noted these sellers will be re-entering a market in which local Realtors has seen sales (and by 'sales' we actually mean to say 'commissions') have been at 10 - 15 year lows.

There are a great many Realtors feeling an income pinch right now, a situation which will be greatly exacerbated come Spring 2011.

As VREAA notes,

• Sales are down year-over-year in the lower mainland, in some areas of BC they are down as much as 50%. There are twice as many Realtors in BC now than there were 10 years ago, and they are now competing for a shrinking pie. In many markets we are seeing Realtors talk about the importance of ‘sharp pricing’. They are applying pressure on sellers to drop prices to points at which they meet buyers. They are a force against the ‘sticky pricing’ that is characteristic of this stage of a bubble burst.

Look for this pressure to be severely ramped up when many of these sellers return to the market in Spring 2011.

Many observers anticipate ongoing minor price drops through October, November and December. Then, in the first half of 2011, you will probably start to see significant changes.

Speculators, boomers, foreign holders, overextended locals and developers will all come to the market and be met by hungry Realtors desperate for income after 8-10 months of the worst sales in over a decade.

Eager to close deals at almost any price, significant pressure will be exerted to speed the price decline.

It could be an intense spring.

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Meanwhile... back in bubble land

Let's take a break from the foreclosure crisis in the United States and pause for a reminder about how it is we live in the city with the most bubbly real estate in North America.

Four consecutive months of declining sales have peope wondering if the bubble is set to burst here in Vancouver.

But don't kid yourself... there are still people buying at bubble level prices.

Take the property pictured above at 348 West 19th St., Central Lonsdale in North Vancouver.

This 23 year old, 7 bedroom, 4,131 sq. ft. house sold in 1989 for $313,000.

65 days ago it was listed for sale with an asking price of $1,100,000.

It sold for $1,065,000!

Granted... it was bought by a local community service organization caring for seniors and handicapped people.

Said the realtor, “The new owners were as giddy as kids at Christmas when this home hit the market. It may have taken over a month to finalize financing for this community service project but, in the end it was my first call, within the first hour of this home hitting the market, that made the sale. It was serendipity. Both parties are very happy with this transaction.”

The bubble persists.

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Do I sense a divergence in the correction?

Later this week the sales totals will come out for the month of August and they will continue a trend that has defined the past three months.

The summer months of 2010 have been marked by a dramatic decline in sales, building inventory and price reductions galore. And bearish market watches sit poised to gleefully herald the long anticipated market correction.

But while August stats will be ample fodder for this outcome, the month's statistics also contain a foul element for the bearish community.

Back in springtime the average price of a detached house price in Vancouver broke through the $1,000,000 mark. And while it declined to $941,275 in July, the August figure has jumped back up to $999,407.

How can this be?

As record low individual sales are broken down, I suspect we will see more westside homes like this one profiled in the Vancouver Sun.

A prime example of some of the bizarre sales of high end homes, this 4-bedroom, 5-bathroom 2,462 sq. ft home (with a measly 33 ft frontage) located at 4036 West 19th Aven. was assessed by B.C. Assessment in July 2010 at $1.508 million.

That, however, was 'assessed' value. The owner listed the house way over assessed value and asked $2.388 million

After 9 days on the market it sold for $2.39 million.

And that has been the hallmark of the Vancouver market and one of the surest signs we in are a massive bubble: when people massively overpay for an asset.

Those conditions are clearly at play now. And even with a dramatic reduction in sales, those houses that are selling are exchanging hands at values dramatically higher than assessments.

The end result is that the average price rises despite the dearth of sales, such are the ridiculous asking prices currently being trotted out by speculators and long time owners alike.

Even this house, which sold below asking price, sold at a ridiculous price.

Located at 3946 West 30th Ave. in Vancouver, the house was purchased in 1981 for $195,000.

This summer it was listed with an asking price of $2,188,000. After 51 days ti sold for $2,050,000.

Thus is the state of the Vancouver Real Estate market, North America's most bubbly real estate market.

The R/E cheerleaders will point to this sales as an example of why it's different here... hallmarks of Vancouver's resiliency.

History is replete with stories of excess at the end of boom times. And the Village of the Rainforest is no different from those tales.

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The world and it's view of Vancouver

I have lived in this city for almost 40 years now.

And there is one thing that has always stood out for me... and that is the dramatically different perception you can have of this city based on the way you travel to the downtown core.

Drive down Granville or Cambie Steet, and the city rises up on a sunny day as a spectacular jewel nestled against the mountains.

Drive along Kingsway or Hastings, and the city is a slum.

That dichotomy will take on mythic proportions in the coming weeks.

I can't find the link right now, but I read one account of a journalist visiting Vancouver and he talked about his anticipation in seeing this fabulous city. But leaving his hotel in Burnaby, he would drive down Kingsway and loop around the downtown eastside, never finding the Vancouver of the travel magazines.

I know exactly what he means.

Next week NBC will broadcast Vancouver to the world. Now, Dick Ebersol (of NBC Sports) has already made it clear that the main network of the NBC will do nothing but display Vancouver in all it's stunning glory. NBC does that with every host city.

But contrast that approach with this article from MSNBC.

For those who think the Olympics will be a non-stop real estate advertisment for the Village on the Edge of the Rainforest, this is a taste of what many media outlets will be reporting this week.

• Canada’s Olympic city has notorious skid row
  Vancouver’s darker side emerges from district known as ‘Pains and Wastes’
  
  (note to NBC headline writer: that's 'Pain and Wastings' - the writer gets is right in the article)
  
  VANCOUVER, British Columbia - Five blocks away from the venue for Vancouver's Olympic opening ceremonies, four grizzled addicts huddle in the rain, injecting themselves with heroin behind a trash bin.
  
  Welcome to Downtown Eastside. Here, life is gritty, volatile and the slightest misstep can invite brutal retaliation.
  
  "It's a jungle," said Glen, a 49-year-old heroin addict who goes by the street name Trouble. "You want to get out of here."
  
  As Vancouver prepares for the Olympics and the descent of the world's media, the Downtown Eastside remains a huge problem — 15 square blocks of despair, squalid rooming houses and alleys populated by thousands of addicts, the homeless, the mentally ill and the drug dealers who prey on them.
  
  This neighborhood is the most concentrated drug and poverty ghetto in North America, with high use of heroin, cocaine and methamphetamine, according to criminologist Benedikt Fischer of Simon Fraser University. It's also the only place in North America where drug addicts can shoot heroin into their veins at an officially sanctioned injection site.
  
  'Pain and Wastings'
  
  At the center of the neighborhood is a neoclassical building endowed by philanthropist Andrew Carnegie in 1903. Behind it, dealers and pimps hawk drugs and women in a filthy alley. And on its front steps is Vancouver's largest open-air drug market, at the intersection of Main and Hastings streets— dubbed "Pain and Wastings" by locals.
  
  Across the street is Vancouver's biggest police station. Police Const. Lindsey Houghton said officers often find themselves in the role of social workers while continuing to target the drug trade. About 49 percent of Downtown Eastside calls are related to mental health, according to the Vancouver Police Department.
  
  "It's a tremendous challenge that goes beyond the traditional scope of policing," Houghton said.
  
  The International Olympic Committee's bid evaluation team didn't see the Downtown Eastside when it assessed Vancouver's bid in 2003. When it came time to tour Vancouver venues, the IOC's bus took a wide detour around the neighborhood.
  
  The bid evaluation team did see the scenic but treacherous highway from Vancouver to Whistler, host of alpine and sliding events. While about $500 million has been spent on the road, the Downtown Eastside remains much the same.
  
  As they did in 2003, welfare recipients still line up once a month to receive their welfare checks. Welfare Wednesday is known as Mardi Gras in the area, the recipients called "two-day millionaires." Needle exchange staff work on the welfare lines.
  
  'Insane'
  
  The area gained international attention when pig farmer Robert Pickton was arrested in 2002 and charged with the deaths of 26 prostitutes and addicts from the Downtown Eastside, in what police say is Canada's worst serial murder case. He killed and butchered them at his suburban farm. Some remains he fed to pigs. The rest went to a rendering plant.
  
  Mona Wilson's head, hands and feet were found in a bucket at Pickton's farm. Her brother, Jason Fleury, called the Downtown Eastside a time bomb and accused officials of doing nothing to defuse it while spending millions on the Olympics.
  
  "It's crazy. It's insane," Fleury said.
  
  Prostitution rights activist Jamie Lee Hamilton said little has been done to curb violence against prostitutes since Pickton's arrest.
  
  "There is this perception that all the violence ended when Pickton was arrested," Hamilton said. "We know it's hunting grounds down there, and we're doing nothing about it. The women, the men and the transgendered are living prey."
  
  Due in part to rampant intravenous drug use, the area's HIV rate is the worst in the developed world, said International AIDS Society president Dr. Julio Montaner. The HIV rate qualifies the Downtown Eastside for World Health Organization epidemic status, he said.
  
  Montaner said the combination of drug and health programs as well as housing initiatives are beginning to slow the crisis. But progress may be halted by the increasing violence of Vancouver's drug trade, as cocaine prices skyrocket in the wake of a Mexican drug-cartel crackdown.
  
  Critics allege the Downtown Eastside will be sanitized during the Games under recently passed legislation that allows police to force the homeless into shelters in cold weather. That would violate bid assurances, they say.
  
  "Nobody has a right to move those people simply to accommodate a better visual image for the Olympics," said provincial legislative housing critic Shane Simpson.
  
  Vancouver Organizing Committee vice president of sustainability Linda Coady said the issue has nothing to do with the organizing committee, and that VANOC's interest is what goes on inside Games' venues.
  
  "Outside is the domain of the Vancouver Police Department," Coady said.
  
  Meanwhile, the safe injection site in the Downtown Eastside is the busiest in the world, with about 500 supervised injections a day, according to Insite supervisor Russ Maynard. Addicts shoot up at 12 booths with mirrors on the walls so that nurses on a raised platform can see them.
  
  Maynard said by the time an addict gets to the Downtown Eastside, they are totally dysfunctional. Even trying to get help is hard, he said, as pay phones are used constantly to make drug deals.
  
  "You could get beat up for tying up a phone for five minutes," he said.
  
  He said 90 percent of people using Insite have Hepatitis C. The national rate is less than one percent.
  
  Insite has operated for six years under an exemption from Canada's health laws. The federal government's attempt to close Insite ended Jan. 15 when the British Columbia Court of Appeal ruled addicts had a constitutional right to health care. Whether the case winds before in the Supreme Court of Canada remains to be seen.

MSNBC has taken a realistic, cold, hard look at the real downtown Vancouver. The view that so many locals simply refuse to acknowledge and put blinders on for.

Somehow I don't imagine excerpts of the MSNBC story making it's way into any Bob Rennie literature on the Woodwards development.

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Get Ready for Real Estate to Really Catch Fire

Sound incredible?

Consider....

November/December, normally a down time for the industry, have been red hot. Word has it that concerns about possibly missing out on low interest rates, combined with the looming introduction of the HST tax, are pushing many new buyers into bidding wars to get into the market.

Regardless of the shortsightedness of this, I am told it is a definite factor in the current market frenzy.

And if that is indeed the case, then prepare for the market to explode.

In an exclusive interview with Canwest News Service and Global National, Finance Minister Jim Flaherty said the government is closely monitoring the red-hot housing market for signs that it is reaching "irrational" levels.

Now... we already know that the market is irrational and, as we have discussed, this is largely by design.

The government, seeing what happened to real estate based assets in the United States, slashed interest rates to dirt in a desperate attempt to re-inflate the collapsing economy and housing market.

And their actions have been wildly successful.

We've also talked about how they don't want to destroy this momentum... just slow it down a bit.

To this end Bank of Canada Governor Mark Carney has taken to the talk circuit issuing 'warnings' to individual Canadians and financial institutions to be 'prudent'.

Now Flaherty has come out and said that the Federal Government will, if necessary, further tighten the conditions under which the Canada Mortgage Housing Corporation insures mortgages,

The Conservatives have done this once already.

In July 2008 the Finance Department announced that CMHC would shorten the maximum amortization period that it would accept to 35 years from 40, as well as require a down payment of at least 5% of the value of the home. The new rules came into effect in October 2008.

"If we have to, we'll do what we did last year and limit the rate of amortization further than we already did, and require higher down payments,"said Mr. Flaherty.

If Flaherty takes action, it will likely come when the next budget is brought down in March, 2010.

But watch... the mere suggestion will inflame the market and sent another crush of people dashing after cheap rates in a desperate attempt to avoid both the increased costs of the HST and the looming spectre of 10% down and 30 or even 25 year amortizations. Potential new buyers will panic as they try to get the property that they want - regardless of how much they overpay.

Far from helping to moderate the overheated market, the fear is that Flaherty's simply pour gasoline over it.

(Note: Two posts for Saturday. See below for 'Financial Heroin')

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Disconnect

The Village on the Edge of the Rainforest is the poster child amongst Canadian cities for disconnect.

The most poignant example can be seen from the corner of Hastings and Main. Looking north, towards the homes nestled on the side of Grouse Mountain, you gaze upon Canada's wealthiest postal code.

It's about a 15 minute drive (at nighttime) from where you are standing. And where you are standing is at the heart of Canada's poorest postal code.

Joining that chasm is the stunning disjoint between Real Estate values and our economy.

Beyond all expectations, Vancouver’s housing market is hitting record sales activities and prices late in 2009.

Against that backdrop Statistics Canada released its labour report for October and advised that the nation lost 43,000 jobs.

This clawed back most of the increases in employment that occurred in August (+27,000) and September (+31,000).

Nationally this serious round of recessionary job cuts began a year ago, in October 2008, much later than in most other countries. So far the total number of job losses has added up to 400,000. Slightly more than half of those have come in manufacturing.

In B.C. the bloodletting continues. Another 13,000 jobs vanished last month and most were in manufacturing, education and the trades. The Wet Coast jobless rate now jumps to 8.3% from 7.4% and clearly shows our province is still in grip of the recession.

There are three stages of employment declines undertaken by firms in an economic downturn: 1) initial panic layoffs; 2) “hanging on for dear life” layoffs; and 3) re-positioning for the future layoffs. The final stage is what will predominate for the next several months.

And after February that 'repositioning' will intensify as job losses shoot up when all those people who are working for, and around, VANOC are devoid of a raison d'etre.

But our housing market chugs on as if incomes were being fueled by boom times. Normally Real estate is closely tied to the labour markets, incomes, lending/rates, credit, supply/demand, confidence, etc - but the closest tie is always with the economy and labour markets.

But that tie, in Lotusland, has been severed.

Stimulus and government agencies are allowing people without money to buy homes. CMHC has removed the risk from lenders so that mortgages are available to those who, in other times, wouldn't get them. And the bubble builds ever so dangerously higher.

How long can that disconnect continue? Even the most ardent Real Estate bulls are starting to speak out. Yesterday it was BCREA's Cameron Muir who admits we will have "the slowest recovery we’ve ever seen coming out of a recession."

And it was Muir who said it best; "it's irrational exuberance and it cannot last."

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A Real Estate Carol?

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CMHC UPDATE: Financial Post Editorial - CMHC Needs to Review Policies

Cameron Muir is the chief economist for the British Columbia Real Estate Association and is someone we have criticised on numerous occasions for his overly optimistic assessments of real estate in BC.

Throughout 2008, Muir seemed to be taking a page from Prime Minister Harper's playbook and endlessly denied the economy was heading for recession and that housing values might decline.

And when they did, Muir still seemed to understate events.

So we were taken aback to read the comments he made yesterday to the Kamloops Homebuilders’ Conference as reported in the Kamloops Daily News.

Muir told the conference that Vancouver’s record housing sales and prices are "not sustainable because interest rates have nowhere to go but up."

Say wha???

Muir noted that last year’s credit crisis helped affordability across B.C. through a combination of lower housing prices and lower mortgage rates. But the same sudden increase in affordability on the Left Coast caused a frantic amount of activity once fear from the crisis wore off. But that activity cannot last, Muir argued, calling it “irrational exuberance.”

(We call it an even more dangerous bubble than we had before the crisis, but we're good with his assessment)

And what does the coming year hold in store for us?

“We have high prices, affordability limits and [then we will] inject higher interest rates.”

And the outlook for the Canadian economy?

“This will be the slowest recovery we’ve ever seen coming out of a recession,” Muir said.

So what will all this mean for real estate?

Those rebounded prices and higher mortgage rates will combine with a slow recovering economy and it will mean the days of double-digit housing price increases are over, Muir argued.

“How high can prices go before consumers reach a limit on what they can pay?” asked Muir.

Muir said he expects the prime rate to rise from today’s 2.25 to a more than double rate of 4.75 in 2010.

Whoa!

Today's posted rate for five year mortgages at RBC is 5.74% (with a special offer of 4.44%). An increase of 2.50% would boost that 'special' rate to almost 7%, the stated rate would jump to 8.24%.

Hmmm... wasn't the 'doomsday' rate cited by those mortgage brokers in our post on Wednesday set at 8%?

It makes you wonder if Muir didn't get the 'Sunshine, Lollipop and Rainbows' memo sent out by CMHC on the bright future for real estate in 2010. Michael Levy got it.

For Muir, this is the equivalent of having been visited by three spirits and the ghost of Jacob 'Van-Housing-Blogger' the night before the conference.

All that remains now is to see if Muir maintains his penchant for dramatically understating what is coming.

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Refreshing?

You've read endlessly on this blog about how the members of our little Rainforest Roundtable think there are serious looming hazards involving real estate here on the left coast of Canada.

Incredibly not everyone shares our opinion.

Today... one of those divergent voices.

Michael Levy is the owner of Border Gold, a gold and silver business started in 1968 in Vancouver. Michael is also a financial expert in currencies and commodities and is often called up to act as a business analyst for radio station CKNW/980, the CORUS Radio Network and makes frequent appearances on both CTV and Global TV.

Yesterday he provided an interview on HoweStreet.com, a website compendium of business news and commentary. The interview was titled, "A Great Time To Buy a Home in Vancouver". If you would like to download this audio file of the entire interview, right click this link and select "save", "save as" or "save file as" (depending upon your browser).

The key excerpts are as follows:

• The interviewer asked for Levy's comments on the US Federal Reserve’s decision to keep the central bank rate at zero for the foreseeable future...
  
  Levy: "The American economy is running 100% on stimulus right now. Until you see the private sector get in, then you are not going to see interest rates go up. Right now, interest rates are staying down."
  
  On Real Estate, Levy was asked what he saw coming ahead for Vancouver and the GVRD...
  
  Levy: "Oh... I think it’s gonna be good because there is real demand here. ‘Real’… real demand in real estate and with ‘real’ demand you get prices going up. This is not a bubble here.. but now, you’re going to get prices pulling back, November, you know, the last part of this month, into December, January. But that’s cyclical. But there’s actual demand and if you don’t think or if one doesn’t think that the Olympics are going to put a new face again on Vancouver – then take another look. It might not happen immediately but its also going to be very attractive to people who continue to move here, for businesses who relocate here, for tourists to come here, for conventions to come to our new trade and convention centre, for Whistler on the new sea to sky highway. We’re going to see real estate continue perking. Now that doesn’t mean it’s going to keep going up like it has in the past four or five months. That was a pretty good move back up, but its going to be a healthy market in my mind."
  
  Interviewer: If you were standing in front of the graduating class at BCIT this month and they asked you for a couple of sentences on money advice advice, what would you be telling young people right now?
  
  Levy: "That to pool their resources and go out and buy something in real estate, in other words I don’t think you should be waiting around. If you’ve got a partner or a friend, a husband or a wife and you’re living together and both have jobs and you’ve got very little or no debt then you can get into a condominium at a very reasonable price and because of interest rates where they are, I’d start into the real estate market. In other words I would start to own because you can’t step up until you own and I think you have to bite the bullet and own real estate."
  
  Interviewer: If you could be visual with us here at howestreet.com, Mr. Levy, you would notice that you would be standing on one side of the gunnel here at the ship and you would have quite a few people glaring at you from the other side, but boy it is sure refreshing to hear somebody talking so upbeat.
  

There you have it. Refreshing and upbeat.

What could possibly go wrong?

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Opportunity

Vancouver's sales numbers for October are out and the average price has pushed higher yet again. Graph above comes from Larry Yatkowsky's website. Click on image above to enlarge.

We have almost reached the previous highs and it's interesting to see how the latest numbers are casting despair amongst those who have been expecting a correction in the Lower Mainland Real Estate market.

Some have speculated that the Vancouver market and it's numbers may be the first to prove the 'bubble pattern' incorrect. That 'pattern' would be the playing out of the bubble lifecycle graph which represents the way all bubbles have corrected themselves in the past (click on image to enlarge).

The Rainforest Roundtable was discussing this very issue last night. We would humbly suggest the bubble lifecycle theory is correct, it's the assumption that the Vancouver market had reached it's peak that was incorrect.

Don't get the wrong impression though - our market is in a bubble and it will burst.

The current rise is attributable to one thing and one thing only: government intervention.

Anytime central banks intervene and pump billions or trillions of dollars into the financial system, a bubble is created that must eventually deflate.

Rather than allow the market to correct itself and clear away the worst excesses of the boom period, North American governments have colluded to create another bubble.

By attempting to cushion our economy from the worst shocks of last year's financial collapse, the Bank of Canada and CMHC have ensured that the ultimate correction of this mess will be more severe than it should have been.

As US Senator Ron Paul noted yesterday, "as the housing market fails to return to any sense of normalcy, commercial real estate begins to collapse and manufacturers produce goods that cannot be purchased by debt-strapped consumers, the economy will falter... government intervention cannot lead to economic growth."

The rationalizations for why the economy is recovering will intensify, as will the delusions that BC (and Canada) will not be affected. We will hear the same sort of platitudes we heard last year when we were Canada and BC would not suffer from the recession in the US and that we would not fall into deficit spending).

What we have is a false recovery. I agree completely with Ron Paul who said, "I am reminded of the outlook in 1930, when the experts were certain that the worst of the Depression was over and that recovery was just around the corner. The economy and stock market seemed to be recovering, and there was optimism that the recession, like many of those before it, would be over in a year or less. Instead, the interventionist policies of Hoover and Roosevelt caused the Depression to worsen, and the Dow Jones industrial average did not recover to 1929 levels until 1954. I fear that our stimulus and bailout programs have already done too much to prevent the economy from recovering in a natural manner and will result in yet another asset bubble."

We are in the eye of the economic hurricane that stated last year. And this is a great thing for Canada and the Lower Mainland. It represents an unbelievable reprieve.

The bubble lifecycle WILL play itself out. But after the freezing up of the real estate market last November, Canadians have been given an astounding opportunity to recognize what is coming and prepare.

And that is a good thing. What more could you ask for?

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It's a madhouse...

"It's a madhouse!... a madhouse!!"

When I read this CBC story, the first thing that crossed my mind was Charleton Heston's famous line from Planet of the Apes.

Today's treatsie: this house at 3712 Prince Edward Street. Located on the east side of the City of Vancouver, it's about to be put on the market for the obscene asking price of $1.27 million.

Perhaps even more astounding is the fact that, although the house won't be officially shown until today, three buyers have already offered to pay full-price without having stepped inside the building.

"Nobody's seen it. I'm very shocked at that [response]," said owner Leland Burridge.

The photo above is from the CBC article. Here are three pictures taken from Google's new 'street view' function. Obviously when Google went by, the house was still being renovated - but the pictures give you a sense of how close the house is stacked up against it's neighbour, and how small the lot is.

(Click on image to enlarge)

For those who don't know Vancouver, the west side is the upscale part of the city. The eastside, with it's smaller lot sizes, is considered 'less desirable'.

'Less desirable' is apparently worth a whole lot more these days. One can assume, with three offers at asking price already, we will see this little piece of heaven go for at least $1.5 million.

But then... this is the land of the million dollar crack shack, isn't it?

A madhouse indeed.

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Prelude to Real Estate Armageddon?

March 12th, 2009.

If you dropped into our little corner of the world wide web that day you would have seen this post titled 'All New Ground'.

• Increasingly it is becoming clear we are living in a once-in-a-multi-generational time...We have never had this much debt, this type of real estate decline or such a rapid collapsing of employment all convergent with a worldwide financial meltdown and a rapid withdrawal of consumer spending.
  
  And because the entire world has been drawn into this maelstrom, the US Dollar continues to hold it's value...
  
  [But] a great many economists are concerned that the only solution that the US government seems to have for the current financial troubles is to print more and more dollars... [which] is set to trigger a collapse in the value of the dollar against real things such as gold and oil, if not against the other paper currencies.
  
  If that happens, the fear is that we will enter the next, much more serious stage of the financial crisis, in which falling currencies will push up long-term interest rates, which in turn will crush what's left of the world's financial system.
  
  If the dollar falls in value to the point where no one wants to hold it, North America will feel a tsunami of accelerating inflation as their currency buys less and less. And this time around "inflation has the potential to be worse than the double-digit rates of the 1970s", said Warren Buffet.
  
  So where are we headed? Is the inevitable result a currency crisis of historic proportions? It's all new ground.
  

History unfolds slowly. Seven months later, are we at the precipice of seeing this prediction play out?

The last few weeks have seen the start of that US Dollar crisis. And yesterday, that crisis racheted up a notch when it was revealed that, over the last three months, banks put 63% of their new cash into euros and yen - not the dollar.

This is almost a complete reversal of the dollar's onetime dominance for reserves.

According to Barclays Capital, the dollar's share of new cash in the central banks around the world was down to 37% - compared with two-thirds a decade ago.

Currently, dollars account for about 62% of the currency reserve at central banks, the lowest on record said the International Monetary Fund.

Investors and central banks are snubbing dollars because the greenback is kept too weak by zero interest rates and a flood of greenbacks in the global economy.

According to the New York Post, "Economists believe the market rebellion against the dollar will spread until Bernanke starts raising interest rates from around zero to the high single digits, and pulls back the flood of currency spewed from US printing presses."

Think about that statement for a moment.

"Raising interest rates from around zero to the high single digits."

That's 8% or 9% - which means your standard five year mortgage will run you 10% - 12%.

Remember last week we talked about how California had to raise the yields on it's debt sale to sell it's bonds?

This morning the impact of these moves in the bond market hit us here in Canada.

Each of Canada’s big banks this morning is increasing the cost of taking out a mortgage. While there were some differences in the details of changes made by the banks to their mortgage rates, the announced hikes put all their five-year fixed closed rates at 5.84%, an increase of 0.35 of a percentage point.

That's an overnight hike of 7% to five year mortgage rates.

And that's without any prompting from the Bank of Canada - whose historic low rate of 0.25% remains intact.

Why? Because the cost of money in the bond market is rising.

The stage is being set for an unavoidable outcome. And when people look back at 2009 they will look at this date as the day we began our march to Real Estate Armageddon.

Today's Independent newspaper in the UK notes that, "the willingness of foreigners to hold dollar assets as opposed to, say, euro assets has allowed American citizens to consume beyond their means for many years. Of course, it wasn't just the Chinese and the Russians who were lending to the US. Others did so via their purchases of US mortgage-backed securities (MBS). But if the collapse in the MBS market exposed the first chink in American economic armour, a rejection of the dollar as the world's reserve currency could expose an even bigger hole. If other nations begin to believe the US is happy to allow its currency to plummet, they may all head to the exit at the same time.

A dollar collapse would be a disaster all round. It would drive up the cost of borrowing in the US. It would leave the international monetary system short of stability and long of fear. It would unleash economic upheavals on a similar scale to those seen in the 1970s."

And you remember the 1970s, don't you? A period when interest rates floated for much of the decade from 11% to 21.5%

Interest rates that high in this day and age will trigger real estate Armageddon here in Greater Vancouver.

Guaranteed.

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Snapshots

Click on the image above to enlarge.

A couple of snapshots of the Vancouver Real Estate market for you today. The above image comes to us from Fish. It's a stunning chart summarizing residential sales in British Columbia. Never in our Province's history had we ever seen a rate of collapse like the one we saw starting last fall. Conversely, never has a climb upward been witnessed like that which we are currently going through.

This drive upward in prices is even more dramatic and steep than was the climb in the bubble we witnessed throughout the 2000's.

And it's not just sales. Housing prices are spiking upward as well. A great chart that shows the drop and jump in values is this one from realtor Larry Yatkowski (as always, click on image to enlarge).

Unprecedented times to be sure.

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Burying our heads in the sand... (merp!)

I have some comments to make about Amoss and the Bank of Montreal, but I am going to sit on if for a bit.

It's easy to write Amoss off but as we saw yesterday, with the update I added from the Financial Post, many analysts still have problems with BMO. And where there is smoke, there just might be some fire.

In the meantime, let's turn our attention back to Real Estate in Vancouver.

Could the market really recover this quickly from the traumatic trifecta of a record real estate bubble, leviathan levels of debt, and a global credit collapse?

We don’t see it as remotely possible, but yet... there for everyone to see... are countless happy headlines and breathless exhortations that the worst is behind us.

July has been a record breaking month for sales. Here is a chart of the Teranet Historic Index Values for Vancouver and we are on an uptick again. And this is before the July stats have been factored in.

And the frenzy is having it's effect.

A work colleague has, just this week, committed to a home purchase in Surrey. With a mortgage at over a half million dollars, it is a significant move.

When asked if he could make things work if interest rates bump up to 6 or 8%, the responsive is chilling. "Sometimes you just have to take a risk."

(Merp!)

Another work colleague has constructed a dream home costing in excess of $1 million, is plunging headlong into a new business that will require another 1/3 of a million and halting concedes it's all highly leveraged.

When asked about it, he tells me that "you can't always just sit back".

(Merp!)

Meanwhile acquaintances in the neighbourhood are struggling with only one income as the husband languishes unemployed since January (construction industry). They sought relief in March by tapping out the equity in their family home. Having exhausted that funding, they have just drawn on the remaining equity in a second home they own as an investment property. Who says use of the Home ATM is dead?

Have the lessons of the last year been completely lost on these people?

We are nearing the day of reckoning here on the wet coast and the signs are everywhere.

The BC goverment, who have been in denial about the severity and state of the world economy, are being forced to pull their heads out of the clouds. Back in May people predicted the government would be in serious financial trouble. The provincial goverment steadfastly denied there was a problem looming.

Now?

The B.C. Liberals warn of impending cuts to government grants, possible layoffs and public-sector wage freezes. The cash-strapped politicians shriek that "the fiscal cupboard is bare and hangs on a wall of deficit spending." The Finance Minister declares that the "downturn is far beyond what we previously had anticipated."

In the United States, the White House warned this week that the economy is in worse shape than expected. Strategist's advise that we shouldn't count on consumers to fuel any economic rebound.

And the US national debt, the sale of whose treasuries controls the setting of mortgage interest rates, will nearly double over the next 10 years - virtually guaranteeing a dramatic increase in interest rates as the US struggles to fund that debt.

Coming back to Vancouver, we seem oblivious to it all.

We are clearly the most bubbly city in North America right now and Vancouverites seem to be in a total state of delusion as they dive headlong into mountains of debt anchored by real estate.

All it will take is a catalyst to trigger catastrophe.

Maybe that's why the Bank of Montreal rumours we covered in detail set off such an avalanche of hits to this site (over 15,000 in 24 hours).

Maybe, just maybe, EVERYONE doesn't have their heads in the sand.

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Vancouver: North America's most bubbly city?

Mark my words, dear reader. The dog days of summer, 2009 will go down in history as the pinacle of our housing folly.

In the same week that we find out that July broke all time sales records for real estate in the Village on the Edge of the Rainforest, Stats Can informs us that the July job loss number were five times worse that most analysts were predicting as 45,000 net workers were officially pushed to pogey.

The unemployment rate stayed steady at an 11-year high of 8.6%, but that's only because discouraged unemployed people, mainly youth, gave up searching for a job.

“[It's a] classic sign of discouraged workers throwing in the towel,” said Douglas Porter, deputy chief economist at BMO Nesbitt Burns.

An economy can still grow if employment stagnates. But an economy can't muster growth if jobs are being destroyed. The all-important consumer spending power will never jump start things under these conditions.

As we predicted several months ago, tourism jobs have been hit hard given the recession in the U.S. and Canada, border issues, fall-like weather in July in most of the country, and the high cost associated with the Canadian dollar.

But it's the private sector that is taking the heaviest blow. Employment fell by 75,000 positions, bringing total job losses since last October to 436,000.

July's private-sector losses were the worst since the record-breaking decline in January. A 35,000 rise in self-employment partially offset the drop, but economists tend to be leery about self-employment numbers in the depths of a recession because self-employment is often a last resort.

The self-employment gain “is not necessarily a good thing as it underscores the lack of opportunity in the formal job market,” said Charmaine Buskas, senior economics strategist at TD Securities Inc. “And as workers have fewer job prospects and bargaining power, wages have obviously suffered.”

Since October, the work force has contracted by 2.4%, all in full-time work. Most of the losses have been in manufacturing, construction, transportation and warehousing.

And yet, in the Village on the Edge of the Rainforest, we have a huge wave of first time homebuyers entering into bidding wars for real estate. They are assuming mortgages with record low downpayments and 35-year amortizations only because they can take advantage of dirt cheap, manipulated mortgage rates.

35-year amortizations on mortgages where only 5% is used as a downpayment (which is pretty much the norm with all new buyers)mean that the principal is barely touched with monthly payments

If housing prices drop by as little as 8%, anyone of these new home buyers who have bought in 2009 could end up in an underwater position - just like that.

And with a worsening job picture, a private sector being decimated by the economy, a federal finance minister who warns the country to "prepare for even more job losses", it all adds up to a precarious position where all it will take is a little push for our bubble to burst in a spectacular fashion.

Sound crazy? Well how's this for a sign of the crazy times? BCTV (or Global), the undisputed king of private broadcasting in BC, just reported that it's parent company defaulted on an $18.5 million US interest payment to bondholders.

This in not an environment that can support a rising real estate market.

Spectacular fashion... mark my words.

(P.S. For those keeping track there were three bank failures in the United States today bringing the year's total to 72)

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San Diego in 2004 mirrors Vancouver in 2008

"America's finest city."

That's what San Diego calls itself. And with good reason. The wonderful city's bay-side location and perfect climate make it a very attractive place to live.

And the parallels to Vancouver don't end there.

From 2001 through 2008, more than 8,000 condominium units were built in downtown San Diego. That's double the number of downtown units constructed over the same period in Los Angeles, a city three times its size.

San Diego was a construction boom town, drawing on it's scenic beauty and temperate climate.

Flush with easy credit, developers and home buyers were eager to invest.

At the height of the frenzy, hopeful purchasers queued up outside sales offices to plunk down deposits. There were occasional arguments over who was first in line. No one wanted to miss out with condo values riding an elevator to the sky.

Near the peak, in May 2004, median resale prices of downtown condos hit $647,500, a 56% increase in just three years, according to San Diego research firm MDA DataQuick.

The Los Angeles Times even profiled one savvy flipper who made a $91,000 profit in less than two months in 2005 by reselling a 560-square-foot studio for $340,000.

"There was a little bit of a mass hysteria mentality. . . . People thought they would be priced out of the market," said Bradford Willis, 47, who signed a contract in 2004 to purchase a $341,000, one-bedroom condo in a planned luxury development. Willis said he bought on speculation because there was little existing inventory on the market at the time, much of it priced above $500,000.

Sound familiar?

And now? Nowhere, nowhere is the real estate collapse more dramatic than in downtown San Diego.

Irrational exuberance has long since given way to buyer's remorse. Median resale prices for downtown units stood at $370,000 in June. That pricey 560-square-foot studio? It was foreclosed and resold this year for $162,000, down more than half from its 2005 sale price.

Downtown San Diego, a 2.2-square-mile area, is now awash in condos. About 400 new and occupied ones are listed for sale, and more than 450 are in some stage of foreclosure and will eventually be put on the market. An additional 1,000 units that were under construction when the market soured are slated to be completed this year, adding to the glut and putting further downward pressure on prices.

So far this year, 159 new homes have been sold downtown, according to DataQuick. At that pace, it would take several years to sell all the units recently completed or being finished this year. Developers are holding units off the market.

But haven't Vancouver condo builders been smarter?

Nor really. They just have the good fortune that the full effects of the busting bubble have not hit Vancouver yet.

Take Nat Bosa, prominent Vancouver condo builder, for example. He is one of the developers who led the condo charge in downtown San Diego. The LA Times notes that Bosa overestimate San Diego's potential, betting too heavily on the urban revival triggered by the 2004 completion of the Petco Park baseball stadium, home to the San Diego Padres.

San Diego has been a disaster for Bosa.

In Vancouver it is the urban revival of the yaletown/expo lands and the trigger of the Olympic Games hype. Is Bosa several years removed from a similar disaster here?

For some developers in San Diego, rather than dump units at fire-sale prices, developers are converting their projects to rentals, at least until the market improves.

Again, sound familiar?

The bubble started to burst in San Diego in November of 2005. By May of 2006, prices started to rise again. From November of 2006 to May of 2007, prices fell a little more and then plateau'd/rose until November 2007...

It was only at this point, in November of 2007 - two years after the bubble started to break - that the market truly plunged downward.

Vancouver is only a year into the start of it's break.

The only thing that will prevent Vancouver from suffering a similar fate is a dramatic recovery in the economy and buyers becoming flush with cash and easy credit.

Do you think that's going to happen?

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If the rats are fleeing, what does that tell you?

If the rats are fleeing a sinking ship, how wise is it to stay on board?

The R/E shills insist that the market crash is over and that the recovery has begun. The burgeoning stock market is pointed to and the mantra of 'green shoots' is repeated week after week while the Real Estate Associations play the 'buy now or be left behind' card once again.

But is economic recovery really just around the corner?

Not according to captains of industry.

Oh, they still publically say all the right things. "The situation is not as bad as it was, the econonmy is improving, blah, blah, blah." But actions speak louder than words.

With that in mind, let me ask you a question.

If the economy is improving, and the DOW is rocketing back to it's former 14,000 point level, would you dump your stock when the DOW is only at 8,500?

According to a report from Bloomberg, CEOs, directors and senior officers of US companies have been selling their personal shares of their own companies' stock at the fastest pace since credit markets started to seize up two years ago.

Insiders of Standard & Poor’s 500 Index companies were net sellers for 14 straight weeks in data compiled by InsiderScore.com. Since these executives presumably have the best information about their companies’ prospects, what does that tell you?

“If insiders are selling into the rally, that shows they don’t expect their business to be able to support current stock- price levels,” said Joseph Keating, the chief investment officer of Raleigh, North Carolina-based RBC Bank, the unit of Royal Bank of Canada that oversees $33 billion in client assets. “They’re taking advantage of this bounce and selling into it.”

The last time there were more U.S. corporations with executives reducing their holdings than adding to them was during the week ended June 19, 2007, the data show. The next month, two Bear Stearns Cos. hedge funds filed for bankruptcy protection as securities linked to subprime mortgages fell apart, helping trigger almost $1.5 trillion in losses and writedowns at the world’s biggest financial companies and the 57% drop in the S&P 500 from Oct. 9, 2007, to March 9, 2009.

And the weasels are selling again, hmmm.

Talk the market up and then dump your shares on the suckers rushing in.

It's almost a metaphor for real estate sales in Vancouver the past few months, don't you think?

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Disclaimer: The content on this site is provided as general information only and should not be taken as investment advice. All site content, including advertisements, shall not be construed as a recommendation to buy or sell any security or financial instrument, or to participate in any particular trading or investment strategy. The ideas expressed on this site are solely the opinions of the author(s) and do not necessarily represent the opinions of sponsors or firms affiliated with the author(s). The author may or may not have a position in any company or advertiser referenced above. Any action that you take as a result of information, analysis, or advertisement on this site is ultimately your responsibility. Consult your investment adviser before making any investment decisions.

Reality vs Fantasy

On Saturday we talked about the surge in real estate prices fueled by the goverments excessive, all time low, interest rates.

The fantasyland of a return to real estate boom times is hitting hard against the reality of the actual economy as the latest EI figures are released.

The number of British Columbians collecting employment insurance climbed again in April, rising by another 1,400 recipients. Statistics Canada said that the total number of EI recipients in B.C. hit 82,700 people, up 1.7% from the month before.

This now represents a dramatic rise in EI recipients in BC.

Since October 2008, the total percentage increase in EI is an astonishing 81.6% (37,200 people).

"Between April 2008 and April 2009, the increase in the number of beneficiaries in British Columbia was widespread, tripling in Cranbrook, Kelowna and Campbell River, and doubling in most other major centers," Statistics Canada said in a news release.

"In Victoria, the number of beneficiaries increased by 2,500 to 3,900, while in Vancouver, there were 34,500 people receiving regular benefits, an increase of 20,500 over 12 months."

Statistics Canada said that the province's hardest hit sectors in terms of job losses includes construction, transportation and warehousing, accommodation and food services, finance and insurance as well as forestry and logging.

My email box has been filled these last two days with comments from readers who despair about the latest surge in the real estate market.

"How can prices be going up?", they ask.

The fact of the matter is that our governments are desperate to stall and stave off continued declines in real estate values in the hope that the economy can be resuscitated.

It is the natural reaction of people to protect what they have (and thus the natural reaction of governments). Unfortunately we live in a capitalist oriented system, and the nature of that system is to tear down what isn't working and allow capital/resources to redeploy.

When this process happens every few generations, it triggers a very painful but necessary chain of events.

And it takes the extraordinary politician to allow it to happen.

Regrettably a politician that facilitates it will probably fail to win re-election. Thus we have politicians who meddle and that meddling often exacerbates the situation.

Thus our government has slashed the Bank of Canada rate to an astounding 0.25% in an attempt to prevent capitalism's 'creative destruction'. And the cheap money is doing it's job by stimulating buying to create a temporary effect.

But it is temporary.

The reality of our economic situation is that unemployment is at an 11-year high. Our manufacturing sector been decimated, our major car companies are bankrupt, Air Canada - our national airline - is being bailed out, retail sales are plunging and our federal government’s finances have been utterly trashed leading to the greatest deficit in the history of our country.

In light of all this, is buying real estate property at the current prices really a smart idea?

Cheap money is leveraging the market right now.

Increasing unemployment, closed up factories, rising mortgage rates, soaring energy costs, record household and mortgage debt levels and the inevitable surge of higher taxes is going to take it's toll.

The fall of the real estate market is going to be all the more harder and sharper when it comes.

The story here isn't amazement that the buying frenzy has returned.

The real story is understanding how it is that people can't see what's coming.

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