Saturday, September 11, 2010

Debunking the myth of the Vancouver Real Estate Bubble!

Perhaps we can retitle this post: "My Daddy sold real estate and now so do I, so listen up!"

Vancouver Realtor Greg Andruff proudly proclaims on his website, "I sell houses on the Westside." As such he's not too impressed with all this talk about a Vancouver Housing Bubble, a condition he proclaims is a 'myth'.

And Greg has the experience to make such a claim. From his website citing his qualifications:

  • After growing up in a “Real Estate Family” and many years in the service industry, Greg decided to prepare himself to join his family’s business by working for a year in the conveyancing department of one of the top real estate conveyancing law firms in Vancouver. Greg then achieved his real estate license as a Residential Sales Representative and joined (the family business) to continue with his passion of great service.

Today our buddy Greg proudly sets out to 'Debunk the Bubble' on his website.

After citing the Canadian Centre for Policy Alternatives published study 'Canada’s Housing Bubble: An Accident Waiting to Happen', Andruff tells us there are holes in the bubble plan because,"As a Vancouver Realtor® I can only comment on my knowledge and experiences from the point of view of the Vancouver Market."

I don't think it will come as much of a surprise that Andruff's point of view is that all this 'bubble talk' is hurting business and is, therefore, a bunch of B*llsh*t!

Andruff dismisses concerns about overextended buyers and the other concerns about the state of our market by telling us that "in Canada we do have several intelligent organizations closely monitoring these “factors” to ensure that we do not follow the American path."

You can follow the link to the read his weak analysis for yourself.

Andruff says that "the Vancouver market is not currently approaching any triggers to burst a bubble such as wide spread job loss or a rapidly rising interest rates. Vancouver’s housing inventory is balanced. Interest rates are at historic lows (they will go up eventually just yesterday short term rates when up a quarter point) but at the moment they are remaining relatively flat (and fixed rate mortgages have recently dropped). We will likely see slow and moderate growth and we are currently experiencing high net migration of wealthy 'high net worth' Asian immigrants creating demand that is currently being met with a somewhat balanced supply of housing stock. "

Bottom line: we're immune from the evolving worldwide economic collapse and we've got that 'hot asian money' coming in.

Gee Gary... thanks for that. How could I possibly see things differently after that explaination.

Guess I will pack the blog in now.



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  1. Where would we be without the exuberant wisdom of youth

  2. Greg is part of a very naive group, most of them young, that just do not understand what we have seen over the last decade or so. We have witnessed economies that thrived on credit expansion and debt. People like him naively believed that the economies of North America (and Europe) were chugging along on their own strength. The truth is they were chugging along on massive credit expansion and massive debt. Both government and personal debt. This young generation are most likely in for a shock because all they understood or have seen was Boom, a little slowdown than Boom again with the party barely slowing down to catch it's breath. well, the party is over, payback time has arrived and this time payback will be a B1tch.

    I can recommend a books for him. It was written by someone who did have the credentials and the experience and still did not understand the underlying fundamentals. His name is David Lereah, the former Chief economist and Senior VP of the US National Association Of Realtors. He was another one that foolishly believed that there was no bubble, that it was a myth and that the party would go on forever. So much so that he wrote a book about it. He unfortunately convinced many of the naive that the US housing party would still be going on today.

    "Are You Missing the Real Estate Boom?: The Boom Will Not Bust and Why Property Values Will Continue to Climb Through the End of the Decade - And How to Profit From it"

    A good guy to listen to is Gerald Celente. His company has been featured on every news media outlet in the world and their track record for predicting what will happen economically in the coming years has been remarkably accurate. He has stuck to his guns despite all of the talk about "Green Shoots" and still believes that we are heading into a Depression, what he refers to as "The Greatest Depression". Do a search on Youtube for his outlook, there are tons of videos.

  3. Make no mistake...with their inflated sale price to average income ratio, Vancouver will be Ground Zero when(not if) the market corrects.

  4. Whisperer:
    Going back a few post to "how hyperinflation will happen" (which struck me as rather absurd and deeply flawed at the time, I was expecting better from you) don't miss this longish post from Mish Shedlock articulating better than I could exactly how loopy that scenario is.
    I am still waiting for a post reconciling your calls for inflation against a deflationary background. Again, that is monetary inflation, not mere price increases. Food, oil and energy and other daily needs aren't deflating.

  5. Oops, I guess I should include the link, perhaps?

  6. Hi alexcanuck.

    The post on a theoretical framework for the arrival of hyperinflation was reprinted from the blog of Gonzalo Lira and it went viral on the internet.

    It cuts to the biggest and most confounding debate in all of finance: what will the final outcome of the Fed's market manipulative actions be? Deflation, inflation or, and not really comparable, hyperinflation (which is a distinctly different phenomenon from either of deflation or inflation).

    Lira's post infuriated some hard core deflationists who continue to refuse to acknowledge the possibility that in its attempt to inspire inflation at all costs, the Fed may just push beyond the tipping point of monetary imprudence

    As you noted, Mish Shedlock has come out with a rebuttle to Lira. Shedlock first recorded a podcast on Global Edge with Eric Townsend and Michael Hampton in which Shedlock's conclusion was that Hyperinflation is the endgame, "so it is unlikely." Mish followed this up with a post on his blog.

    Earlier today Gonzalo Lira came out and proposed an open debate with Mish on the topic.

    We will see if Mish accepts.

    From Lira's statement:

    At minute 20 or so, Shedlock — without any provocation by Michael — went off the rails against me and my arguments, claiming I was "inane" and that my arguments were "too stupid to respond to". It was quite a rant, actually.

    I have since then expanded on my ideas that Treasury bonds are in a bubble, fleshing out my thesis that, if there is a run on Treasuries, the cash might flow to commodities, and thereby trigger hyperinflation. I have also appeared on Michael Hampton's podcast, to respond to Shedlock's arguments, though without personalizing this, or making it about Shedlock. Or in fact, even mentioning Mr. Shedlock.

    Today, however, I woke up and read in Mr. Shedlock's blog how I am a "flat-earther" for claiming that hyperinflation might happen. He goes on for quite the long rant, about me and my ideas.

    (continued below)

  7. (Lira statement continued from above)

    Mr. Shedlock, however, does two things in today's rant: Number one, he selectively quotes me, so as to make me sound like a fool. And two, he doesn't lay out my arguments concerning the weakness in the Treasury bond market, and how that might trigger a run up in commodity prices, and therefore hyperinflation. He clips my arguments so that I sound as if I were saying that one day—out of the blue—hyperinflation will come, the sky will fall, and the Mayan prophecy of the end of the world in 2012 will come to pass—save yourselves!

    So of course, Mr. Shedlock has set up a straw man argument, which he promptly demolishes, and thereby makes himself look like a superhero—at my expense. He also quotes other people—whom I am not affiliated with and don't even know—and allows his readers to infer that I fully agree with them, and that I am part of some conspiracist, gold-bug cabal.

    I have—privately—offered to debate Mr. Shedlock in a public forum. He hasn't responded. That is his prerogative.

    However, now, he is publicly attacking me on his blog. He is distorting my views, so as to come off the better for it—while deliberately distorting my views so that I come off looking silly, naive and ignorant.

    Compare this treatment I received from Mr. Shedlock, with the treatment I gave him and his ideas, when I wrote about them in this long piece on Treasury bonds: I was courteous towards Mr. Shedlock and his work, but I respectfully disagreed with him. I quoted him accurately, so as to fully show my readers his thinking, and thereby contrast it with my own. But at no point was I dismissive of his ideas—on the contrary, I took them seriously.

    And nowhere was I dismissive or belittling of him personally, in any way, shape, or form.

    Mr. Shedlock, however, seems to think that courtesy, honesty and accuracy are lesser values. And he seems to have no trouble beating up on me and my ideas—but only when I am not around to defend them or myself.

    Therefore, I would like to take the opportunity to formally, publicly ask Mr. Shedlock to debate these issues with me.

  8. Who is Greg Andruff trying to convince? Us or himself? Maybe both.